Is the recent correction giving a good entry level for a buy position?

The stock market in the US has been in a very strong uptrend since the 20th of March this year. We would like to remind our traders about the huge correction that occurred on the market between the 20th of February and the 20th of March where the market lost on average around 35-40% of its value in a month, caused by fear among investors that the COVID-19 will lead to an economic slowdown and therefore a big correction on the stock market. Thus, the correction took place indeed and the market lost a big portion of its value in a very short period of time. The biggest companies out there, such as Apple, Facebook, Google, Netflix, Amazon etc. lost a big portion of their market value in only 3-4 weeks – a correction that we hadn’t seen for a long time. Even during the financial crisis the market the market took longer to lose 50% of its value between 2008 and 2009. The biggest losers when the pandemic of coronavirus started were airline companies. Delta and American Airlines for example are the biggest US airline companies. They lost around 70% of their market value in 3 weeks as countries and airports were closed, flights were cancelled and practically there was no business for the airlines. That was terrible for engine producers, such as Boeing as well and caused a massive reduction and a huge impact on their revenues and profits.

Yet, like usually happens on the market, bad news was good news for some other investors and traders who didn’t have any positions on the market and that huge correction gave them an amazing opportunity to buy their favourite stocks at a huge discount and therefore be able to maximize their profitability to the upside. In fact, that’s exactly what happened and the market bottomed out on the 20th of March and has been very bullish ever since. We have recently seen a bit of a profit-taking correction on the market after the huge bullish rallies in the past 7-8 months. Actually, that was quite expected taking into account the volatility and uncertainty around the US Presidential Election and the results coming out at the moment. The democratic candidate Joe Biden is leading the battle at the moment and the official results are expected to come out very soon where he is expected to become the new President of the United States. The market’s behaviour was quite interesting back in 2016 when many were speculating that Trump has got no chance of winning and if he does the market will crash and lose 30-40% of its value real quick. Well, he didn’t only win the election back then, but also the market has been in the longest bullish rally in history ever since he was elected.
Quite unexpected right? Well, his Presidency has actually produced some good results. Yes, it is a fact that his speeches and statements are quite ridiculous sometimes but we can hardly argue with the numbers. Well, the numbers analyzing his Presidency and the effects on the economy in the past 4 years have been quite solid. The low interest rates that he has been supporting as well as the lower corporate tax rates have been among the most important factors for his ability to support the economy and make it easier for companies to borrow money at a cheaper rate, reinvest in new projects, employ more people and improve the economy in general. We need to give him credit for that. Well, we are looking forward to the final election results and the outcomes of it.

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