Yang Delong: Dow fell more than 20% into the technical bear market

Yang Delong: Dow fell more than 20% into the technical bear market

Yang Delong: Dow fell more than 20% into the technical bear market
On March 9, due to the double blow of the collapse of international oil prices and the spread of the epidemic, the opening of the S & P 500 index fell to 7% within 5 minutes, triggering a meltdown, and suspended trading for 15 minutes.As of now, the Dow fell 1884.88 points, reported 23979.90 points, a decrease of 7.29%; the S & P 500 index fell 7% to 2764.21 points; the Nasdaq fell 6.86%, reported to 7987.44 points.In the United States trading quotes, the fuse mechanism can be divided into three levels.(1) The primary market fuse refers to a market decline of 7%.(2) The secondary market fuse refers to a market decline of 13%.(3) The tertiary market fuse refers to a market decline of 20%.The United States has recently peaked and fell, and there has been a cliff-like decline, which verifies the 9th article of the 2020 “Top Ten Prophecies” that I proposed on December 10 last year, that is, US stocks will peak and fall this year.The spread of the epidemic overseas, or the collapse of international oil prices, have become a catalyst for US stocks to peak.U.S. stocks will drop significantly after peaking. According to the experience of U.S. stocks, the 20% decline is generally referred to as the bull and bear dividing line. If it falls below 20% and does not pull back, it indicates that the bearish trend is confirmed and further declines by 20%.And now the Dow Jones index has dropped more than 20% from the high point, and technically entered the bear city!An important factor affecting the US stock market today is the sharp drop in crude oil prices. On March 9, Brent crude oil futures jumped sharply and opened lower, opening 25%, and then falling more than 31% to 32.At 14 US dollars / barrel, the decline in WTI crude oil futures quickly expanded to 27% to 30.07 US dollars / barrel, the price of crude oil plummeted, mainly because OPEC did not reach an agreement to reduce production, while Saudi Arabia expressed its intention to increase crude oil production, which caused the collapse of crude oil prices.Last Friday, OPEC and Russia broke down and could not reach an agreement to further reduce production by 1.5 million barrels per day. Saudi Arabia then launched a comprehensive oil price war, which markedly lowered the pricing of major crude oils of different grades. The reduction was at least the largest in more than 20 years, which meansAs Saudi Arabia wants to increase production to seize the market and push as much crude oil as possible to the market, Saudi Aramco has completed its listing, so Saudi Arabia does not have too many concerns. In some cases, Saudi Arabia is to directly attack Russian oil companies in the European market.After the obvious price reduction, there is a marked increase in production. Saudi Arabia expects that output next month will far exceed 10 million barrels per day, and may even reach a record high of 12 million barrels per day. This month’s output is 9.7 million barrels per day.Saudi Arabia confronted Russia by drastically lowering oil prices and increasing production, which may push oil prices further into the abyss.One thing is that the peak of US stocks this time is actually not the main reason for the spread of the epidemic. I think it is mainly because the US stocks have experienced a ten-year bull market. There are no feasts in the world, and the feast of the bull market will also end.However, some factors that promote the growth of US stocks are quietly changing. For example, the Fed has no room to cut interest rates. This emergency rate cut is to boost market confidence, but it has not changed the trend of the United States peaking, and even has seen consecutive plunges.Another factor in the peak of US stocks is that the risk of a decline in US economic growth is increasing. The European economy is already on the verge of recession. In particular, the locomotive of the European economy has experienced negative growth for two consecutive quarters in the second half of last year. The European economy has been affected by the epidemic.Affecting trade, which may cause the European economy to enter into a decline early. These will affect the performance of the US economy, because the United States is the world ‘s largest economy, and the performance of the global economy must have an impact on the United States, and this outbreakIt also increases the interests of investors, so the rapid growth of US listed companies may come to an end, and the marginal utility of major tax reductions for listed companies will gradually decrease, because after continuous tax reductions, the profits of listed companies last year are the most in history.In a good year, with a high base this year, the growth rate will definitely decline, and the profit of listed companies will end the high growth again, which will inevitably lead to a peak in the market.I think that 2020 is a year when US stocks peak, A-shares bottom, U.S. stocks down, and A-shares up. Now it has been initially verified.In the U.S. stocks and Europe, when the Japanese and South Korean stock markets have undergone major changes, whether the A-share market can get out of the independent market, I think the answer is yes.I told you when the U.S. stocks began to plunge. The impact of the U.S. stocks plunge on A shares was short-lived.In the long run, the plunge of US stocks will help investors to profit from US stocks and enter A shares to bargain. In addition, A shares themselves are also a relatively good basis. The base of A shares is low.At 3000 points, although the middle has exceeded 5000 points, the bubble has now been fully released, and the overall market is relatively low. Coupled with the large transfer of household savings, the effect of real change is gradually generated, and the turnover of second-hand housing has dropped significantly.As a result of the restrictions on purchases and loans, real estate speculation has become unprofitable. At this time, residents ‘savings will be transferred to the stock market in large quantities.Funds and other institutional products, these two methods will bring a continuous flow of ammunition to the A-share market, which is the driving force to promote the A-share bull market.At the beginning of 2019, I proposed that the A-share market will usher in a golden decade. The next decade will be a carnival for stock investors, and a feast for value investors. It is gradually being accepted by the market and gradually verified by the market.U.S. stocks are at the top of the 10-year cycle expansion cycle, while A-shares are at the bottom of the 10-year cycle. This is the most important factor in the relatively large differences in the trends of Chinese and US stock markets.□ Yang Delong, chief economist of Qianhai Open Source Fund, editor Wang Jinyu