SOURCE: YAHOO FINANCE
Wall Street expects that the Corona virus is going to impact the SPX earnings significantly and thus the Price Targets have been lowered. Markets have sold off massively due to a sudden realization by the ‘big money’ that the earnings will be signficantly affected for all companies in SP 500. If the earnings go down, the market has to logically reprice the yearly estimates. Check our recent post where we discussed that the market is getting overheated.
Earlier in the year, the Wall Street was expecting the yearly earnings to be at $170. Now the earnings are expected to be around $ 160. Using a multiple of 18, we can calculate that the new target is
160 X 18= 2880.
We have already tested 2850. Selling should stop when the humans will take over the command from the Algos.
Our experience though tells us that the Algos may continue to push the market down and we may test 2630-2650 region in the next few weeks. Needless to say, we are going to see a massive buying opportunity as a result.
At 2650, market will be trading at a multiple of only 16.5.
KEEP CHECKING US OUT AS WE KEEP UPDATING HERE WITH NEW POSTS/ IDEAS TO UPDATE ON THE MARKET TRENDS.