This portion of our continued research into the COVID-1 virus event, one of the greatest disruptions to the global economy over the past 50+ years, concludes in this article. In Part 1 of this article, I highlighted how price factors and economic data continue to suggest the U.S. and the global stock market will likely attempt to retest recent lows or fall further, as the extent of the virus event continues to play out. In this second portion, i will highlight some of this data and present the opposite aspect of the technical/data-driven research.
Recently, something very important has happened in the U.S. stock market – a breakout of sorts. The weakness we expected to see last week prior to the new $500 billion in new stimulus appeared to end this past week. Not only have the markets opened a bit higher this week, but they have continued to push higher over the past 3+ days. From a technical standpoint, as long as the support channels and current trends do not falter, the U.S. stock market may continue to push higher before breaking this uptrend.
NASDAQ 100 Daily Chart
This Nasdaq 100 Daily chart highlights the upside price trend that originated a bottom just as the U.S. Fed initiated a massive stimulus program. Weakness in the market, from a technical perspective, is still the overall trend because of the move away from the February highs. At this point, even if the markets continue to rally, we would need to see a substantially higher price move to establish a new bullish trend. Yet, as long as price stays above the RSI price channel and the relatively low price channel on this chart, the upside potential is higher than the downside price trend we have been predicting.
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