Stock market this week
Latest update: 20-09-2020 18:56
It doesn't look good.
We have been seeing stock markets weakening for weeks. However, there has not yet been a continued decline. However, I doubt that it will stay that way. Investors began to respond more and more to negative news last week.
The FED provided a typical glass is half full situation. While by issuing the guarantee that interest rates will remain low until 2023 and that inflation above 2% is no problem, a positive response could have been expected.
Tech stocks often struggled last week. Bargain hunters could often prevent worse. But there was no more power behind it. I expect that this week and the coming weeks the following 4 things will play an important role.
The United States Presidential Election
The closer we get to the beginning of November, the more that presidential election will play a role. Who it will be creates uncertainty. And uncertainty is something that investors don't like.
It may be a reason to reduce the positions somewhat in time. I don't expect much from this for this week. In the coming weeks, this item will play a bigger role every week.
The Trade War Between the US and China
At the moment there is a leading role for a number of tech companies. The Americans want to take control of Chinese tech companies operating in the US. That seems to be partly successful. Chinese companies are ready to agree.
However, the Chinese government is obstructive. However, I do not expect China to take any tough steps ahead of the US presidential election. The Chinese are hoping for a new president and different policies.
Therefore no reason to argue a lot. This item can certainly play a role on the stock markets. But the role will be limited until the presidential election.
The tech stocks
This item is the most difficult to estimate. The technical analysis indicates by means of a nearly finished head / shoulders pattern that those tech stocks have reached the edge of the abyss.
However, those tech stocks have been the stock market favorites for months and have kept rising. Then, after every fall, there are still investors who are more than happy to get back in at a lower price with the hope of a nice ride.
Despite the fact that those tech stocks were in charge of the stock market in recent months, this can be slightly different in the current situation. The other stocks that are going to fall, which also puts those tech stocks under some pressure.
Just enough to complete the head / shoulders pattern making everything go down. I think the only thing that can be indicated with reasonable certainty is that if there is a decline, it can go down very fast.
Corona will play a bigger role
At the beginning of this year, due to corona and the associated lockdowns, stock markets fell sharply. Support packages from governments and central banks brought recovery. Hope for a corona vaccine has been able to keep the stock markets high in the summer.
In recent weeks we have slowly but surely ended up in a new situation. That of the so dreaded second wave. Especially in many European countries, the number of new corona cases is increasing again.
However, a comparison with the beginning of this year is difficult to make. Then very little testing and now a lot. The number of hospital admissions, occupied IC beds and deaths are more comparable. All 3 are considerably lower than at the beginning of this year. Then there doesn't seem to be much going on.
I want to approach it from both sides. First from the corona side.
More new corona cases and governments are coming up with some small additional measures. Not so much to fear for the economy and the stock markets. If hospital and IC admissions are increasing rapidly, governments have no choice but to institute heavy lockdowns.
Not much to fear about this either, because hospital and IC admissions and, incidentally, deaths are still very low compared to earlier this year.
But now the approach from the investor. At the beginning of this year, investors were unpleasantly surprised with a stock market crash. Suddenly the entire portfolio deep into the red. That has not yet been forgotten.
This will ensure that investors do not allow themselves to be surprised again and that they get out in time. Investors are not going to wait until hospitals can no longer cope with it and new lockdowns are imminent.
The only question is when do investors consider the corona situation serious enough to immediately exit? When I look at Europe, that point seems to be approaching quickly.
In most European countries, new corona cases are on the rise. Then it will not take long before we receive messages that a particular hospital can no longer cope. Governments that have to come up with more and more additional measures can also be the trigger.
In the combination of a rapidly increasing number of corona cases and investors who do not want to be surprised this time, I see a very great risk for the stock markets. There is a good chance that it will cause stock market misery this week.
The gold and silver price
Last week, the FED said it would keep interest rates low until at least 2023 and would have no problem with inflation rising above 2%.
Low interest rates combined with higher inflation lead to monetary devaluation. And money depreciation has been the most powerful driver behind higher gold and silver prices for centuries.
With last week's statements, the FED has actually given us the guarantee that gold and silver will certainly continue to rise until 2023.
Some minor revivals last week. I expect we are on the eve of another leap up. It is important to keep an eye on the gold price for this. Gold above 2000 and the gate opens and the bulls run wild.
A few weeks ago I put 2 new gold diggers on the website. Already increases of many tens of percentages. Also the gold digger that I put on the website in June has already gone up with 100%.
All 3 are working on a drilling program and they are waiting for those results. In this part of the gold and silver bull market, seekers always do best. A combination of a still low stock market value, but sufficient opportunities to raise money for large drilling programs.
If one hits then big gold or silver it is bingo and the share can go up by 1000% (3 zeros) or more.
Last summer I made a list with 18 mainly gold and silver seekers. 2 have already been put on the gold mining website a few weeks ago. I will continue to follow the remaining 16 closely and wait for the best entry opportunities.
The weekly forecast for the stock markets
I see the greatest risk with corona and investors who now want to react early to a deteriorating situation. Corona vaccine setbacks can hasten those investor responses. I will keep you informed with daily updates.
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The weekly forecast for the AEX
It has been exciting a few times in recent weeks. Yet the AEX was unable to reach the 530 and could usually be absorbed by the higher support at 540. There were certainly revivals, but each time less powerful.
The top of the bandwidth 530 - 575 was no longer able to reach. Given what is going on, I keep expecting a decrease. The 540 and 530 are numbers to keep an eye on, given the support that lies there. Below 530 and the decline will continue.