The U.S. stock market place is set to record another hard week of losses, not to mention there’s no doubting that the stock market bubble has today burst. Coronavirus cases have began to surge in Europe, and also one million people have lost their lives worldwide because of Covid 19. The question that investors are asking themselves is actually, simply how low can this particular stock market potentially go?

Are Stocks Going Down?
The brief answer is yes. The U.S. stock market is actually on the right course to shoot its fourth consecutive week of losses, and it appears as investors and traders’ priority these days is keeping booking earnings before they see a full-blown crisis. The S&P 500 index erased every one of its yearly profits this specific week, also it fell directly into negative territory. The S&P 500 was able to reach its all time excessive, and it recorded 2 more record highs before giving up all of those gains.

The point is, we haven’t noticed a losing streak of this particular duration since the coronavirus sector crash. Saying this, the magnitude of the current stock market selloff is still not so strong. Bear in mind which back in March, it took just four weeks for the S&P 500 and also the Dow Jones Industrial Average to record losses of over 35 %. This time about, the two of the indices are done roughly ten % from their recent highs.

Overall, the Dow Jones Industrial Average is down by 6.04 % year-to-date (YTD, the S&P 500 has declined by 0.45 % YTD, as the Nasdaq NDAQ +2.3 % Composite is still up 24.77 % YTD.

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What Has Led The Stock Market Sell-off?
There is no uncertainty that the present stock selloff is primarily led by the tech industry. The Nasdaq Composite index pushed the U.S stock market out of its misery following the coronavirus stock market crash. But now, the FANGMAN stocks: Facebook, Apple AAPL +3.8 %, Netflix NFLX +2.1 %, Google’s GOOGL +1.1 % Alphabet, Microsoft MSFT +2.3 %, Amazon AMZN +2.5 % and Nvidia NVDA +4.3 % are actually failing to keep the Nasdaq Composite alive.

The Nasdaq has captured 3 days of consecutive losses, as well as it is on the verge of recording more losses due to this week – that will make four days of back-to-back losses.

What’s Behind the Stock Market Crash?
The coronavirus situation in Europe has deteriorated. Record cases throughout Europe have placed hospitals under stress once again. European leaders are actually trying their best just as before to circuit break the trend, and they have reintroduced some restrictive measures. On Thursday, France recorded 16,096 fresh Covid-19 cases, and the U.K additionally found the biggest one day surge in coronavirus cases since the pandemic outbreak started. The U.K. reported 6,634 new coronavirus cases yesterday.

Naturally, these sorts of numbers, together with the restrictive steps being imposed, are only going to make investors more plus more uncomfortable. This is natural, since restrictive actions translate straight to lower economic activity.

The Dow Jones, the S&P 500, moreover the Nasdaq Composite indices are chiefly neglecting to maintain the momentum of theirs due to the increase in coronavirus cases. Of course, there’s the chance of a vaccine by way of the end of this season, but there are additionally abundant challenges ahead for the manufacture as well as distribution of this sort of vaccines, within the essential quantity. It’s likely that we might will begin to see this selloff sustaining with the U.S. equity market for a while but still.

What Could Stop the Current Selloff of U.S. Stocks?
The U.S. economy have been extended awaiting yet another stimulus package, and also the policymakers have failed to provide it really far. The first stimulus package effects are virtually over, as well as the U.S. economy demands another stimulus package. This particular measure can maybe reverse the present stock market crash and drive the Dow Jones, S&P 500, and Nasdaq set up.

House Democrats are crafting another roughly $2.4 trillion fiscal stimulus program. However, the task is going to be bringing Senate Republicans and also the Whitish House on board. Thus, much, the track history of this demonstrates that another stimulus package is not likely to turn into a reality anytime soon. This could easily take some weeks or months prior to being a reality, if at all. Throughout that time, it is likely that we might will begin to witness the stock market sell off or at least will begin to grind lower.

How big Could the Crash Get?
The full-blown stock market crash has not even begun yet, and it’s unlikely to take place provided the unwavering commitment we’ve observed as a result of the monetary and fiscal policy side area in the U.S.

Central banks are ready to do whatever it takes to cure the coronavirus’s current economic injury.

Having said that, there are several important cost levels that we all should be paying attention to with admiration to the Dow Jones, the S&P 500, and also the Nasdaq. Many of those indices are actually trading beneath their 50 day basic shifting the everyday (SMA) on the daily time frame – a price tag degree which typically signifies the very first weak point of the bull phenomena.

The next hope is that the Dow, the S&P 500, moreover the Nasdaq will stay above their 200-day basic carrying typical (SMA) on the daily time frame – probably the most critical cost amount among technical analysts. If the U.S. stock indices, particularly the Dow Jones, and that is the lagging index, rest below the 200 day SMA on the day time frame, the it’s likely that we are going to visit the March low.

Another important signal will also function as violation of the 200 day SMA next to the Nasdaq Composite, and the failure of its to move back again above the 200-day SMA.

Bottom Line
Under the present conditions, the selloff we’ve encountered this week is likely to expand into the following week. For this particular stock market crash to discontinue, we need to see the coronavirus scenario slowing down drastically.