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Last week gave hope that stock markets had found a bottom, with a three-day rally that brought the Dow up over 20% from Monday's close through the end of Thursday's session.
The Dow rallied more than 6% on Thursday to post its biggest three-day gain since 1931.
After all of the doom and gloom over the last few weeks caused by the coronavirus outbreak, people are desperate for any good news, and investors are eager to find a floor to the market.
But it's that bias that may be causing a Reality Gap between what people are hoping for in the market and what is actually happening.
In fact, stocks fell sharply on Friday, giving back some of the previous three days' gains on news that the United States has now become the country with the most confirmed coronavirus cases.
So the question remains: Are we at the bottom? And what will tell us that the market is making an investable bottom - one that will hold for more than a week or two?
For that, we know that the exponential spread of the virus itself is the primary problem. But with an estimated 1 billion people worldwide now under some sort of advisory to stay indoors and limit social interaction, fear and anxiety is taking a huge psychological toll on people.
The economic consequences of it all are clear to see. At its lowest point, the Dow was down 37% from its peak.
But have no doubt. We will get through this.
And on that last point especially, there are five clear signs I'm looking for to identify when the markets will bottom out...
About the Author
D.R. Barton, Jr., Technical Trading Specialist for Money Map Press, is a world-renowned authority on technical trading with 25 years of experience. He spent the first part of his career as a chemical engineer with DuPont. During this time, he researched and developed the trading secrets that led to his first successful research service. Thanks to the wealth he was able to create for himself and his followers, D.R. retired early to pursue his passion for investing and showing fellow investors how to build toward financial freedom.