Dow Jones: How low will it go?

12 Mar 2020

Donald Trump announced a 30-day travel ban for Europe, which ignited another bout of panic selling. Honestly, I think the market is overacting a bit here. Between 1918 and 1919 the spanish flu killed more than 20 million people, but Dow Jones mostly went up, in 2020 the corona virus killed less than 10000 and the market is dropping nonstop? Some people say travel ban of europe will destroy global trade and cause another great recession, which is ridiculous. Countries implemented travel bans in 1918 and 1919 too, no global recession happened at all.

300 week moving average is roughly 21500, which DJI just dropped to today. Historically Dow Jones had dropped to its 300 week moving average and bounced back in 1937, 1962, 1966, 1968, 2001 and 2011. 2020 should be no exception.


If this panic continues, the lowest point DJI could drop to is 19500, which is roughly another 10% drop. 19500 is the 10 year moving average. DJI had dropped to 10 year moving average and bounced back in 1923, 1939, 1962, 1966, 1981, and 2002. The virus will not destroy global economy, it is damaging some industries like tourism and international education, but it will also benefit some other industries like IT and gaming, as more people will be forced to stay indoors and spend more time on computers.