Will the Dow Jones Index Fall Below 18,000 Points?

By Dale Gillham | Published 30 March 2020

Last week the yoyo conditions in the US stock market continued with the Dow Jones Index falling on Monday to a low of 18,213 points before rising over the next three days only to fall away on Friday.

While the Dow Jones finished the week up over 12 percent, the good news is that the fall on Monday was the low for last week, with the market falling to a good support level at around 18,000 points. So is this the bottom?

Right now, it is not a matter of if the Dow has had its low, it is a matter of when will the next fall occur and how bad will it be. For now, I expect the market to rise for one to four weeks, which will tell us more about whether the Dow will fall below 18,000 points or whether it is likely to stay above this level.

If the Dow Jones breaks below 18,000 points, it has very strong support around 15,000 points and in my opinion, it is highly unlikely that this level will be broken. If we assume this as the worst case, then the Dow Jones could fall a further 20 percent from last week’s low before we see an end to the stock market crash.

In recent days the US Government has approved a 2 trillion-dollar Federal bailout with most adults getting $1,200, which the Government hopes they will spend to stimulate the economy. That said, the real crucial aspect to the bailout is the support for small business and I believe the Senate’s plan is a good one.

A couple of key points to keep in my mind is that the $350 billion forgivable loan program is designed to ensure that small businesses do not lay off employees. Business will also receive a 50 per cent refundable payroll tax credit on wages to retain workers.

While in every storm there are companies that not only survive but thrive, the question that remains is which businesses will survive this economic tsunami? To answer this, we need to look at e-commerce websites that allow people to set up and run businesses from home including IT services and support, data and video conferencing services such as Zoom, other messaging and conferencing services, cloud services such as accounting, customer relationship management, sales and marketing consulting to name a few.

We will also see growth in self-sufficient sustainability, as people will want to be safe and more self-reliant. I also expect personal services, such as virtual personal assistants and other virtual workers will look at deriving revenue from home. Therefore, solutions such as becoming an Amazon or eBay, seller may well flourish. Personally, we are getting a lot more enquiries as more and more people are seeing the stock market and trading as a way to not only make money but protect their financial future.

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