Bear Market Wakes as Oil Hits $45

The Bear Wakes: 'Oil at $45' and Stock Market Falls

Buy now or wait for everything to sink a little more? That's the question going around the tables since screens stopped rising and started giving money back at a forced pace. The bear market has proge up after a long hibernation, and it has done so with oil as the protagonist: one participant puts the barrel around $45 and another recalls few WTI drops as sharp as this session's. In the United States, the indices fell as much as 800 points before closing nearly in the green, according to a forum user, a swing that portrays the state of nerves.

Is the cobi19 the cause or just the excuse for the crash?

Two narratives clash. One holds that the fall had been brewing for a while: with a global megabubble underway, markets kept rising like crazy and the bicho would have been just the spark, not the fire. The other focuses on the epidemic and its timeline: quarantines to avoid hospital collapse, spread in the United States, and a vaccine that wouldn't arrive until mid-summer. Some sum up the outlook in one phrase: 'It'll be at least July.'

Those looking at China downplay the drama. One forum user argues that the outbreak began to improve in just under two months and that outside Hubei there were no comparable quarantines, from which he draws an uncomfortable conclusion: an airborne bicho can't be stopped without brutally strict isolation. The nuance matters because everything else depends on it.

How far can the stock market fall from its highs?

The scenarios circulating among participants come with concrete figures. One calculates that if the S&P 500 touches its 2018 low, something he considers almost certain, the correction would be around 30%, a textbook partial entry. If the epidemic is slowed by good weather and health measures, the rebound could be brutal; if not, the index would go to 1500, a 55% drop from its highs. In that worst-case scenario, he adds, there would still be liquidity to average down.

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Buying in the Panic: The Temptation of a Bargain

This is where the game is decided. Some advocate going shopping while others sell, and some warn that the dead cat bounce could leave more than one trapped. Personal figures portray the moment: one forum user claims to have less than 5% liquidity in his portfolio; another says he has 4797 euros to invest, unemployed and unable to deposit more, just when the companies he likes are at bargain prices; and a third has cash locked in deposits that don't mature until May.

The precedent that repeats in the thread is that of 2009: some recall that when the country looked its worst, the stock market signed off on a magnificent year. No one has a crystal ball, but whoever waits for the absolute low usually arrives late.

The bear, meanwhile, keeps waking up. And those who were sealing the bunker with an eye on October already have the answer: it wasn't in October.