2020-04-11: Are we there yet? (II)

My last post was just two weeks ago on March 29th 2020 and since then the COVID-19 has added 1 million confirmed cases and tripled the number of deaths:

Note: On March 29th the total confirmed cases were 700k and the number of deaths 33k.

Meanwhile the markets seemed almost euphoric with the S&P 500 gaining around 200 points, while NASDAQ advanced 600 points. The Fed stimulus is really helping to boost the markets, and most probably to let many hedge funds sell (to the Fed) at better prices to avoid bankruptcy. But the last trading day, Thursday April 9th, closed with the following picture for the 3 main indices (Dow Jones, Nasdaq and S&P 500):

All 3 indices closed below the 50% retracement level. Also, the 3 of them are in overbought territory for the Efficiency Ratio indicator.

So what happened during the last market crash in 2018?

In 2018 markets recovered quite sharply once the death cross was formed (50 SMA crosses below 200 SMA) crushing plenty of bears that were expecting the market to continue lower or at least to retest the lows.

So, are we now in a similar scenario like in 2018 were the markets will rebound sharply now squeezing out the bears? or will this time be different and the markets will not only retest the lows but even go even lower (taking the S&P 500 to the 1700 points as I wrote in my last post)?

I still think that there is too soon for a fast recovery. This time the impact to the economy is really like never before (except during the wars). The whole planet is affected (or shall I say infected) by this pandemic and the markets, despite the Fed, will eventually reflect the reality.

One last note. I really like this info-graphic. Are we in the overconfidence phase?:

Good luck and stay home!

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