COVID-19 vs. S&P

Usually the stock market started its bear move as a result of financial crisis or unmanaged debt by financial institutes. That is not the case any more with fear of Corona virus (COVID-19) spreading all over the world so fast which made S&P 500 hit its lowest points since 2018 that was about 26%. This slump can be considered as a correction move if it maintain its level and did not go down more than that. But what appears to all investors that this down move will continue and no one knows where will be its next stop. All of that happen as a result of fear that made all investors started sell off process that made this drop.

That lead us to a conclusion that the bull movement of stock market which started in 2016 was based generally in greed only. Major companies at that time until now did not make any profit that justify the bull movement of their stocks. There were no new development in their products/services that can help investors bet on them. Despite that their stocks were soaring and going up without any correction except for some drops. Even the Forex market which considered the most liquidated market with around two trillion dollars per day, lack the momentum that it used to have because money has been shifted to stock market. The greed make a lot of traders who bet on prices rather than companies join the stock market and ignite the bull movement since 2016.

Now with fear factor the other part of the equation, the first part was the greed that made the bull market since 2016, we saw bloody markets with all major indices going red and drooping more than 25%. If this move continue with its momentum we will be the first to watch a financial crisis that caused by fear rather than bad debt or government money policy that never happened even in times of wars.

But this nonsense market that moving down driven by fear should be a good opportunity for wise investors who never bet on prices but good companies. What good investors should do as all previous ones did is to invest in market where people running out of it because of fear. This does not mean that an investor should jeopardize her capital and invest her money in the market right now. But she should pay attention to companies earning report and study its financial statement closely and notice any good oppurtinity for investment. Once she spot that opportunity, she should wait for the first sign of of bullish move when the price crossing up the simple moving average of (50) days and pullback. Once this happen she can then step in and invest as well as wait for her investment to be fruitful which might be one year from now where her capital might increase 100% or 200% or may be more than that.

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