S&P 500 next stop 2000 & financial crisis? Bottom not nearIn recent activity, the COVID-19 outbreak has stirred the global economy and the S&P 500 is no different. We have seen a 33% decline from all-time highs and we could effectively say that the strong bull that started in 2009 and rallied 411% is effectively over. If we consider the trend line to be the turning point.
The outbreak has stopped a lot of business from running, disrupted supply chains and caused multiple lockdowns. The borders in many countries are closed, airlines are unable to fly and are on the brink of collapse. We do not know the full effects of the virus outbreak on all of the world's companies yet but we will in the next few months. Countries around the world have been devastated and the bottom is NOT NEAR!
We're dropped so much closing under the 2300 level this week which kills investor optimism. There is key resistance to the upside, the first being the 2400 area where we need to see price break above and hold for a slight push to the upside. However, with the continuous spread and global lockdown, we don't see that in the near future. We have used the Fib levels to identify potential targets and 2 potential outcomes.
There is massive support at 2000-2080 to the downside where we can see a stall in price.
The 50% fib level is the massive support were watching around the 2050-2080 area. This could be the bottom for the next few months as the Fed and government is starting to push money into this market, one step away from just buying assets. At this point we would have seen a 39% drop from all time highs.
The second more dire scenario is a slight stagnation before the cases actually get a lot worse, companies closure continues and companies even start to bankrupt. Where the S&P 500 will be driven lower into the 1700 level, down 50% from all time highs before we start to see some upside.
