What we have to watch for is a head and solders bounce. This is where a crash hits and a lot of people are holding stock, but don't want to sell at depressed prices. So as soon as the stock market approaches the prior level all of these people sell and you get this down, up down and then a dead cat bounce at the end. This is simply a system of psychology.
So the big test for Trump will be if the second drop is bigger or smaller than the initial drop. If it is smaller, then we are likely to head back up. Everyone who wants out of the market is out and those that are in are looking to make money on the rise. If the second droop punches through the prior low then it is just going to keep heading down.
Of course you can. Because the people trading in that market are still humans, and have the same human responses as people have had since markets started trading. This is a psychological effect, not a purely economic effect. If the Boomers and older Gen-X get spooked and decide to change the ratio of bonds to stocks in their 401K accounts the market is going to to shift. You can argue economic theory to a scared 60 year old all day long and it just isn't going to matter. That is why I said it is President Trump's big test. If people calm down then we go back to growth. If the CNN doom merchants win then we are going to bounce up and then head back down again. Economic fundamentals only kick in once the psychological panic has passed.
Funniest, and best, part 😎😎😎
No brakes!
WE JUST CAN'T STOP WINNING, FOLKS! THE TRUMP TRAIN JUST GOT 10 BILLION MPH FASTER!
CURRENT SPEED: 359,839,385,117,000 MPH!
At that rate, it would take approximately 4.663 years to travel to the Andromeda Galaxy (2.5 million light-years)!
What we have to watch for is a head and solders bounce. This is where a crash hits and a lot of people are holding stock, but don't want to sell at depressed prices. So as soon as the stock market approaches the prior level all of these people sell and you get this down, up down and then a dead cat bounce at the end. This is simply a system of psychology.
So the big test for Trump will be if the second drop is bigger or smaller than the initial drop. If it is smaller, then we are likely to head back up. Everyone who wants out of the market is out and those that are in are looking to make money on the rise. If the second droop punches through the prior low then it is just going to keep heading down.
This isn't anything like prior economies and you cannot take prior examples and extrapolate to our current markets.
Of course you can. Because the people trading in that market are still humans, and have the same human responses as people have had since markets started trading. This is a psychological effect, not a purely economic effect. If the Boomers and older Gen-X get spooked and decide to change the ratio of bonds to stocks in their 401K accounts the market is going to to shift. You can argue economic theory to a scared 60 year old all day long and it just isn't going to matter. That is why I said it is President Trump's big test. If people calm down then we go back to growth. If the CNN doom merchants win then we are going to bounce up and then head back down again. Economic fundamentals only kick in once the psychological panic has passed.
Take in point commodities fell while the markets fell. I took a beating on silver when, as with past economies, I would gain.
Source:
https://www.kitco.com/finance/details.html?j1_module=indiceDetail&popup=1&j1_symbol=%24DOWI&j1_override=&j1_region=