The world's eyes are on the United States this month.
Health officials are currently monitoring over 8,400 potential coronavirus cases in the US.
There have been 88 confirmed cases of the US Covid-19 and 2 deaths in Washington.
And last week alone, the Dow Jones Industrial Index (Dow Jones) fell more than 12% in just a few days…
This was the biggest drop for the largest stock exchange, since the financial crash in 2008.
It's at the stage where on Friday, the World Health Organization hiked its coronavirus risk assessment to “very high.”
And it's not slowing down yet…
In today's article we'll go through the reasons why I expect the Dow Jones to drop another 15% and what we can do to profit from it…
Pickpocket Trader just closed a massive 323% gain on the US 500…
In the same week, his followers could've banked another 51.57% % on brent crude and 15.8% on Merck!
Central Banks to the US rescue?
According to the “Fed Watch”, if the Coronavirus is not contained soon, there is a good chance the Fed will cut the interest rates in April…
Major banks are also hinting of further rate cuts from the Fed in the next couple of months, by at least 100 basis points by year end.
Now usually, a rate cut is good for stock markets as investors take their investments out of low interest assets and re-invest them into assets with better returns…
But this reaction is not a short-term effect, and it will show positive signs for upside over the medium term.
As traders we need to look and try to justify what happened to the Dow Jones having crashed over 12%, in just a few days.
Based on the 12% drop, investors find it disappointing that the US now depends on the Fed to intervene for a loose monetary policy.
Even Michael Arone, Chief Investment Strategist for State Street Global Advisors told MarketWatch in an interview:
“I think the Fed’s rate cut backfired in many ways. Instead of soothing the market, it’s reignited investors’ worst fears,”
Fear and Greed Index is at EXTREME fear levels
One of the most popular barometers, used to measure investors emotions of is with the ‘Fear & Greed Index’ (FGI).
The index spans from 0 to 100,
Between 50 and 100, displays the Greed sentiment which tells investors to buy – driving up the price.
And between 0 and 50 shows the level of Fear sentiment, causing investors to sell taking the price down…
Well in just a few days the FGI dropped to 14, showing that ‘Fear’ is overpowering the US markets which confirms the continuous downside.
Dow Jones crashes 12% and breaks a 15-month uptrend
Looking at the daily Dow Jones chart, you can see the price was moving up a solid uptrend for the last 15 months…
But then in just the last few days, we saw a price crash of more than 12%.
Now with the panic and selling picking up, we can expect the Dow Jones to continue dropping to its next floor level.
Which in this case, based on the previous low, it’s at 21,647…
This is another 15% downside; we can expect the market to drop to which we can profit from…
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How we can profit from the next 15% crash for the Dow Jones
There is one trader who’s taken full advantage of the tumbling stock markets in the last two weeks.
I’m talking about Trader X..
In fact, Trader X has managed to help bank his subscribers 15.80% from Merck, 51.57% from Brent Crude and 323% from the US500…
And so, the best way to get exposed to international stocks on the Dow Jones and other main US indices, is to join Trader X’s, Pickpocket Trader service.
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