The Federal Reserve used their biggest weapon by dropping discount rate to near 0% and providing $700 Billions worth of liquidity to financial markets on Sunday in order to calm the markets. However, the stock market dropped around 12% instead. Investors worry that the economic situation must be very bad for the Fed to act like this. So in order to calm investors and the market, good news from the COVID-19 front is needed.
Overall, I think the COVID-19 situation should be worse to the market than the 2000 Tech Bubble and the 2008 Financial Crisis because we need the virus contained and lowering interest rate and injecting capital is not going to help. Since the 2000 and 2008 bear markets caused the market to go down 50% and 57% respectively. This new bear market likely drop at least the same percentage if not more. The US stock market likely have more downside to go as the confirmed infection cases are just started to explode in the United States.
That said, even in bear market the market will bounce strongly from time to time. Recently, the market has been volatile and has been moving 5 to 10% a day easily. For nimble and skillful traders, profit can be huge if one can catch the bounce. Technically, the market may be in one of these bounce situation now. The following S&P 500 chart shows it has nearly totally retraced the big gains from December 2019. The December 2019 low at 2346 level is a good support. It is only 40 points below from today's close of 2385. Separately after more than 700% increase during the last 1 month, Fear Gauge VIX is showing extreme fear. And over bought /over sold indicator CCI is at -308, its lowest in more than 2 1/2 years indicates extreme oversold. Market is extremely oversold , in extreme fear state and near important support, these are usually factors for a strong market bounce. I am looking for the S&P 500 rebound to its 200 day moving average at 2641, a 11% bounce. In order for the bounce to materialize, the COVID-19 news need to be calm, though. Virus news always override technical indicators.
今天又是股市一个历史性的日子，道琼斯指数，标准普尔500指数和纳斯达克综合指数分别下跌2997点（-12.93％），-325点（-11.98％）和-970点（-12.32％）。 这三个指数均创下了单日下跌点数的历史记录，单日下跌百分比则仅次于1987年的22％。 平均而言，这些指数从历史高点下跌了约30％而在熊市之中。
星期天美联储制出最大的武器，将贴现率降低至接近0％，并向金融市场提供价值7000亿美元的流动性，以稳定市场。但是，股市却下跌了约12％。投资者担心，经济形势必定非常不利才导致美联储采取这种行动。因此，我们需要COVID-19方面的好消息才能使投资者和市场平息担忧。
总体而言，我认为COVID-19的情况比2000年的技术泡沫和2008年的金融危机对市场更不利，因为我们需要遏制病毒才能解决问题，而降低利率和注入资金是无济于事的。2000年和2008年的两个熊市，美股分别下跌了50％和57％。这个新的熊市可能下跌至少相同的百分比，甚至更多。随着美国确诊感染病例刚开始爆发，美国股市还会有更多的下行空间。
不过，即使在熊市中，市场也会不时反弹。最近，市场动荡不安，每天轻松地以5％到10％的速度上落。对于敏捷和熟练的交易者来说，如果能够抓住反弹，利润将是巨大的。从技术上讲，市场现在可能处于反弹状态。以下标准普尔500指数图表显示，它几乎完全回撤了自2019年12月以来的大涨幅。2019年12月的低点2346水平是一个良好的支撑。该水平与今天2385的收盘价相比，它仅低40点。在过去一个月中，恐慌指标VIX涨幅超过700％，它表现出投资人的极大恐惧。超买/超卖指标CCI现在是-308，是2 1/2年多以来的最低水平，显示市场极端超卖。市场极度超卖，处于极端恐惧状态和接近重要的支撑位，这些都是市场强劲反弹的因素。我期望望标普500反弹至200天移动平均线2641，反弹11％。不过如要反弹得以实现，COVID-19新闻需要平静。病毒新闻总是会胜过技术指标。
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