The collapse of NYSE
Historically, records of stock market crashes date back to the year 1634, when the first speculative bubble, on Dutch tulips, created the first market crash. After it was first imported from the Ottoman Empire (now Turkey) to Europe, the rare, exotic beauty of the tulip created high demand among the Dutch elite, who saw the plant as a status symbol. Prices skyrocketed from 1634 to 1637, and soon speculators — even middle-class ones — began buying up all the tulips they could as prices soared. But as interest waned in tulips, prices cratered, bankrupting speculators who had assumed the run-up in the value of tulips would last forever. We are facing a difficult situation with the new global problem.
The predictor says it will be the growth rate of the coronavirus currently running at reported rates of 15%-20%. This rate, even if the growth rate falls sharply quite soon, will lead to a 1,000,000+ infection tally outside of China unless magically the growth rate collapses. This will cause a period of market panic and slump.
The lack of reported infections in places like Brazil, Russia and India also begs the question of the current count before you even wonder about numbers in places like Iran and a China reporting only about 100 new cases a day.
This tends to suggest this outbreak will turn into a rolling health issue that will see it reach a chronic phase that will weigh on the global economy perhaps for years. These factors will be factored in by the U.S. as the outbreak firms to be more than a few hundred “isolated” cases. This moment will see a base to the market slump. Europe is heading for 2016 levels fast. Why won’t the U.S. markets? Until the market bases this is my road map.
The market will base and it won’t bounce fast because the coronavirus will keep the market suppressed for at best weeks, probably months, perhaps a year or two. As such, there is no point in trying to catch the bottom, the market will give everyone lots of time to time their entry.
When virus growth rates outside China get under 10%, then we should have been the bulk of the fall, but it is impossible to catch the bottom and best not to try. You have to buy the crash but you should buy the aftermath, not the collapse and right now, this is the collapse.
By: Domenico Greco