In this article, I share an update on the current state of the US stock market. As it plunges lower due to fears and uncertainty over the Coronavirus infection.
How The Coronavirus Infection Affects The US Stock Market
Coronavirus Infection Affects The US Stock Market – YouTube Video
Coronavirus Infection Affects The US Stock Market – Script
Have you seen the US stock market? What is going on in the economy?
In this video, we’re going to explore the effect that the coronavirus is having on the US stock market. We’re going to look at different stock charts including the $SPY and the $DJI. Along with some data from graphs as well as charts.
Coronavirus Infection Affects the $SPY
Here is a daily chart of the $SPY. It is actually 14:30 for me here in the UK, which means that it is just after 9:30 over in the East Coast and consequently the stock market has just opened. I am quite intrigued to see what is going to unfold.
As you can see from the chart of the $SPY, we had a crazy drop-down last week, which started on the 21st February 2020. Which was just over a week ago, on Friday. On Monday 24th February is when the stock market gapped down and opened considerably lower, due to fears over the coronavirus infection.
During those 5 days of plunging lower on the $SPY, it has dropped just over 1000 points! Previously to this sudden drop on the $SPY, you can see the gradual stair-step uptrend of the bullish trend on the $SPY. However, the bears have now completely dropped down, getting onto the underside of the technical indicators. You can see from the charts that a couple of days blasted through support with no resistance.
Uncertainty and fear from the Coronavirus infection is having a massive impact on the $SPY and the $DJI of the US stock market.
Coronavirus Infection Affects the $DJI
” The world economy faces the worst year since the recession back in 2009 as the virus hopes fade” -Bloomberg
The $DJI follows very much the same pattern as the stock charts for the $SPY. There was a short correction period back in 2018, following this a steady growth with slight pullbacks. However, at the top of all-time highs, we are now experiencing this massive drop lower, due to coronavirus infection fears.
From the close of Friday 21st February to Friday 28th February, the $DJI has dropped 14% in 1 week! Just over 4000 points!
Going Long During Coronavirus Infection Fear?
However as the $SPY was making these huge drops down last week, trade opportunities are still available. As always you can follow the trend and short these positions. However, sometimes it can be quite tricky to find a short on these stocks depending on where you are trading in the world.
But there are some available opportunities for going long, such as trading the $TVIX. Which generally trades in an inverse relationship to the $SPY. The $TVIX has provided some sound opportunities for long positions, during this period of high volatility.
Alongside the $TVIX, Coronavirus infection stocks have also been making some HUGE moves in the market. As always, these volatile moves provide opportunities for day traders to capitalise on the momentum.
What Does This Mean For The Stock Market?
This graph shows confirmed cases from the Coronavirus infection. This data was taken at 11:59 pm 1st March 2020. As you can see, there are just over 88,000 confirmed cases globally of people suffering from the coronavirus infection. Alongside this data, confirmed deaths from the virus currently stand at just under 3000.
However, this has all happened so quickly, and the World Health Organisation is working on creating some treatments for the coronavirus.
Moving onto the last graph, this shows a number of recovered cases. Whereby just over 42,000 people have experienced the coronavirus but are recovering from this. Which is super positive!
Coronavirus Infection Affects The US Stock Market – Conclusion
As the development of the coronavirus infection has been happening extremely quickly. As a result, this has caused tremendous fear and uncertainty in the US stock market, which is being reflected in these extreme moves.
But people are recovering from the coronavirus infection, and there is still hope. Historically, the US stock market is resilient, and there is always the chance that what we are experiencing is a short term correction, before gradually making our way back to all-time highs.
Meanwhile, the extreme volatility in the market continues to provide opportunities for day traders to capitalise on these extreme moves.
What do you think will happen? How do you think the best way is to trade in a bear market? Do you think a recession is on the way? Share your thoughts below! 🙂
FURTHER READING
How to find the best stocks for day trading
Day Trading- small account update
Trading View Tutorial for beginners
