A subscriber asks; Some index targets for U.S. stocks

-Despite the current state of panic and high VIX readings, we can still look at the charts to determine likely support targets on the major stock averages.
-I would only be concerned about a protracted economic downturn if it were coupled with a directional upward shift in the yield curve or inflationary growth that rose off their current levels. Given the current backdrop, I see these as remote.
-Given the ostensible drops in some economic sectors, I see the possibility of massive fiscal stimulus in the near future. The central banks will work with the major nation-state governments to exert an ever-greater sense of control over their populations. The more that circumstances come unglued, the more the governments will work to fill the void.
-My concern is that even after this coronavirus crisis fades, the governments will have gained more control over our daily lives. This consolidation of control will be on par with what occurred post-9/11.

S&P 500 emini futures, 5-yr weekly. Two areas of support that should be tested over the next couple weeks
S&P 500 futures, 20-year monthly; a test of the 50-month mva is likely at 2601
Dow Jones Transportation Average (DJT), monthly chart; Huge red candle for 9/2001. Though transports tanked after 9/11, they bounced back
The DJT dropped about 30% after 9/11. A corresponding drop from 10,200 would place the DJT at about 7,140. The DJT has been the worst performing major index.

 

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