Donald Trump’s trade war has so far caused considerable price declines on the financial markets. For the American S&P 500, the most important stock market index in the world, there has been a drop in -18.9% on the boards so far. This is temporarily avoided an “official” bear market, because a decline of -20% is necessary.
A story of “fast-bear markets”
It could be that we have now seen the soil for the S&P 500, and the same is probably true for other risky systems such as Bitcoin (BTC). In 2018, 2011, 1998, 1990 and 1978 we also saw that the S&P 500 almost got into an official bear market.
It is noteworthy that the S&P 500 in these years just below a price decline of -20% it stopped with falling. Apparently there is a kind of psychological support, and it is a point at which a certain group of investors start buying again.
If the S&P 500 has now reached the floor, it would mean that the courses will increase again. Caleb Franzen from Cubic Analytics calculated how the S&P 500 reacted on average after the soil was reached.
On average, the S&P 500 reaches an increase of 26.4% after six months after reaching the desired soil. These are returns to which investors do not say no.
The problem is, of course, that we do not know whether the stock market has actually reached a floor.
Has the S&P 500 reached its floor?
For the ground question, we depend on the moods of Donald Trump and his government. If you soon end your trade war, this would significantly increase the likelihood of a floor.
It is a good sign that the trade restrictions for many countries have been paused by 90 days and that China has already received an exception to electronics.
Donald Trump also seems to understand that his trade war has the potential to cause considerable damage. For this reason, he now seems to withdraw. Also the Bitcoin course already reacted positively and rose again towards $ 85,000.
This is not yet the level at which we can speak of an actual resumption of the bull market. But the longer we stay above this level, the more likely it is that Bitcoin and the S&P 500 have reached a floor.
(Tagstotranslate) Donald Trump