While the Dow Jones Index ended the week down 2.7 percent last week, the good news is that it is still trading 13.25 percent higher than where it closed nine days prior on 23 March. Interestingly, on five of those past nine days to 3 April, the Dow Jones closed higher than it opened. This essentially means that the bears have eased off from selling and the Dow is currently in limbo looking for direction.
If the Dow Jones Index can hold above 20,400 points this week, we may see it trade up over the coming one to four weeks. That said, it is always wise to expect the worst and hope for the best; therefore, we need to expect that the Dow Jones may fall to 15,000 points before we can confirm the bottom of this current market crash.
During the week Oil jumped 32 percent on hopes of the Russia and Saudi oil war coming to an end. Demand for oil is down due to the Corona virus and with the Northern hemisphere coming into summer the demand for heating and other oil will see a further reduction, so a resolution may be timely.
It is expected that production cuts will occur soon, which will reduce the stockpile but when and how big the cuts will be are yet to be seen. Right now, this war is having a big impact on US oil producers, so the sooner it is over the better.
As expected, unemployment in the USA grew during March with the Bureau of Labor Statistics reporting 701,000 individuals lost their job. We need to remember that the unemployment rate has been at near historical lows for quite some time, sitting around 3.5 percent for three of the past four months. The jobless rate now sits at 4.4 percent although this is expected to rise in April.
In 2009, during the GFC, the jobless rate rose to around 10 percent before falling over the next 10 years. Given the jobless rate is coming off very low levels, there is a little room to move before there is any major impact. That said, how high the employment rate will get in the US is anyone’s guess.
This month we will see the last of the 4th Quarter earnings come out and while we can expect some interesting results, what will be most interesting is the guidance these companies have for the 1st quarter of 2020 as this may give us insights into what to expect when we start to see 1st quarter earnings come out in a few weeks.
Good luck and good trading
Dale Gillham, chief analyst Weawlth Within
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I don’t think anyone knows, its just a matter if the market has priced in all or most that will occur. Further, the best way to invest (statistically) doesn’t entail predicting it so not too much of an issue should you take that approach.
👇Comment below if you’re enjoying Dale’s analysis on the market during these uncertain times!
Great work Dale appreciate your analysis. Keeps me calm
We appreciate the support!
The markets are completely irrational – sitting on the sidelines although damn hard when you see the markets rally like they do today. Feel like I’m at a race track watching a two horse race evenly matched.
Some times the market does not make sense and these are the time to watch and learn rather than jump in front of two raging horse to only to get trampled.
Thanks Dale for your expert opinion. Hands well and truly under my backside waiting for your further opinions.
Thanks The Advocate – appreciate the support!
Hi Dale, can you please give some insights on Z1P, EOS and PPE, thank you
Great question Mahmoud Nasr we will endevour to answer your question in next weeks report!
I moved my 401K into the Money Market late February when the Dow went down to 25.6K. It then slid further down. Now I’m worried it’s rising back up to that mark (it’s currently at 23.5K). Not sure if I should hold off and wait for another drop or get back in.
Jeff, this is one of those times where it is very tempting to jump early for fear of missing out. Number one rule in investing is to not loose especially your 401K, and this means not jumping early. Your 401K is long term and so you need to think long term. Thanks for the question.
15 minutes of saying “I don’t have a clue, it might go up or it might go down” in slightly different ways. Amazing what qualifies as expertise these days.
It is called honesty, not enough in the industry are open to it.
Hi Dale, I am from Cupertino, CA. Wanted to know if I missed the market “bottom” and should get in now or is this a dead cat bounce (stimulus checks) . Should I get in now (I only do S & P index) or wait for next “bottom” i.e. around 2100
Welcome to the channel. Cupertino is very nice! Right now there is no confirmation that the market has bottomed and so it is a wait and see game right now. I am assuming given you say you only S&P Index is that you purchase index ETFS, and I believe part of why the market fell so heaviliy is becasue of index ETFs. May I suggest you need to read my book as I go into the US market and the Dow stocks showing how you can do easily do better than index investing. It is available on Amazon.
@Wealth Within Sure I can get the book, but I do not have time and bandwidth to do equity investing, I work full time in tech and most of my available “hours” is spent with my special needs child (my wife cares for him full time). Also I do not “enjoy” reading financial statements, balance sheets etc nor do I have the temperment (fear/greed) for investing, hence the gravitation towards index ETFs (SPY and VOO). Maybe reading your book will change my mind! Thanks for replying and spreading the knowledge.
@nraghu, they way you talk about investing/trading is not what it actually is or needs to be. You do not need lots of time or lots of bandwith in fact the more time and more bandwidths you use the more likely it is you are not successful at it is highly likley you are reacting to fear and greed. Investing/trading safely and getting far better returns than an index ETF is so easy and takes almost no time. In fact if all anyone did was to buy the top 10 stocks on the S&P 500 and held, they would beat the returns on a index ETF that tracks the S&P 500. Please take the time to read the book and I would welcome your feedback along with any questions you might have. I am launching a new show on a new streaming service with my US partners in the next week. On it I will get other experts to give theri opinions so stay tuned!
Global economy on lock down, yet people think the stocks is on a possible bull run. Compared to financial subprime crisis, when trade continues, current stock prices do not seem rational or valid.
Thanks Thai Phra – appreciate the support!