President Trump said Tuesday the U.S. will experience a “very, very painful two weeks” because of coronavirus suffering and death. As a result, the stock market has fallen. However, stocks rose after Dr. Anthony Fauci, director of the National Institutes of Allergy and Infectious Diseases, said a few days ago that as many as 200,000 Americans may die from the deadly virus.
The stock market is complex. Sentiment, securities positioning, technical aspects, short-squeezes and other inputs sometimes overrule the facts.
Here is the key question for investors: Will the “mother of support zones” in the stock market hold? Let’s explore with the help of two charts.
Charts
Please click here for an annotated chart of the Dow Jones Industrial Average ETF DIA which represents popular stock market index the Dow Jones Industrial Average DJIA.
Please click here for a chart of S&P 500 ETF SPY which tracks the S&P 500 Index SPX.
Note the following:
• The first chart, which is monthly, gives investors a long-term perspective.
• The second chart, which is daily, gives a short-term perspective.
• The first chart shows what I call the mother of support zones for the stock market.
• The first chart shows that the stock market touched the mother of support zones and then rallied above the top band of the upper support zone.
• I have previously written that the rally is likely to fail.
• I have previously written that the mother of support zones had an 80% probability of holding.
• The first chart shows that an Arora call as early as Jan. 22 was that an external event could cause a drop in the stock market. Subsequently on Jan. 30, when I wrote that greed and arrogance was driving the stock market higher, I temporarily retreated from my usual polite words to get investors’ attention to the stupidity of aggressively buying at that time. Did investors listen? Some did, but many did not — the stock market rose to a record on Feb. 19.
• The chart shows Arora signals to buy inverse ETF SQQQ and to short-sell Nasdaq 100 ETF QQQ near the top of the stock market and taking profits near the bottom before the rally gained steam.
• The second chart compares S&P 500 ETF SPY to semiconductor ETF SMH and Nasdaq 100 ETF QQQ….Read more at MarketWatch.
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