Perhaps I’m old school, but that seems like a recipe for disaster. With just computers and algorithms in control, I see the potential for a sudden and sharp decline in the stock market.
The amount of new daily cases outside of China has grown to approximately 30,000. If the spread continues at this rate, it could double by next Sunday. That would likely trigger another wave of quarantine measures.
I don’t think we should expect a sustainable low in the stock market until the rate of daily cases peaks and begins a clear and steady decline. According to WorldOMeter, on March 20, 2020 there were some 30,664 new cases worldwide. Up significantly from February.
Sentiment Not Bearish
Even with the relentless decline stocks, the AAII bull/bear spread suggests market participants are still looking to buy the dip in stocks. At previous bottoms, the percentage reached much lower levels (-29.46, -27.97, and -26.54). Therefore, I’m reasonably confident the current reading of -16.79 is not enough to support a sustainable bottom in stocks – dip buyers may get punished.
Gold Price Update
Longer-term, there is no doubt in my mind that gold is heading higher. Governments are about to print massive amounts of money to offset the economic meltdown. However, gold remains vulnerable to further liquidation after hitting our March $1700 target. I think prices could test $1350-$1400 before this cycle bottoms.
Our Gold Cycle Indicator (GCI) finished the week at 46. Usually, I would start to look for a bottom about now. However, the current cycle is more aggressive than most, it could take another month or two for prices to bottom.
AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit https://goldpredict.com/