Covid vis-à-vis Omicron’s effect on Market: Bar-by-Bar Analysis: Let’s take this opportunity to discuss the most important issue (viz. Omicron, the new Covid variant), as of now, which can affect the world
Stock Market.
As per
theguardian.com recent report on Omicron, “Omicron has spread rapidly in South Africa, to the alarm of researchers worldwide. On 1 December, the country recorded 8,561 cases compared with a total of 3,402 reported on 26 November. When the Delta variant began its rapid spread in the UK, case numbers doubled roughly every five days. Scientists are now carefully monitoring Omicron cases to determine how swiftly the variant is affecting the population of Britain”.
First, we will analyse what exactly happened, before Omicron, during Covid. Before Omicron, when news of Covid virus spread starting from 24.02.2020, the very first week world Market (
S&P 500) reacted with a fall of 13.80% from a high of 3,311.69 to the low of 2,854.55. In the second week of Covid, S&P 500 tried to bounce back from that low of 2,854.55 and printed a high of 3,138.22. In the third week of Covid,
S&P 500 collapsed 17.44% from a high of 2,905.30 to the new low of 2,398.54. Then on the consequent 4th and 5th weeks of Covid, S&P 500 made a new low 2,184.19. So the total fall before Omicron, during Covid for S&P 500 was a staggering 35.71%. After this massive correction, S&P 500 bounced back from 2,184.19 to the all time high of 4,743.68. This is equal to a mammoth rise of 117.18% from the week starting on 23.03.2020 till the week starting from 22.11.2021.
Then on 26.11.2021 when the news of Omicron started spreading,
S&P 500 reacted with a moderate correction of 3.95% from the high of 4,743.68 to that week’s low of 3,939.88. So if we compare the 1st week’s fall of S&P 500 during Covid and that of Omicron, it looks like the following:
S&P 500 fall during Covid’s week 1 was 13.80% and S&P 500 fall during Omicron’s week 1 was only 3.95%
Similarly for the 2nd corresponding weeks:
S&P 500 tried to bounce back during Covid’s week 2 with 9.94% movement to the upside leaving a drop of
10.45% from the Covid’s 1st week’s high to the 2nd week’s close.
S&P 500 fall during Omicron’s week number 2 was only 3.82% from its high of 4,672.81 to the low of 4,494.35. This is a drop of mere
4.40% from the Omicron’s 1st week’s high to the 2nd week’s close at 4,534.90.
So, now it is getting clearer that in the first 2 weeks during Covid,
S&P 500‘s correction was 10.45% compared to a mere correction of 4.40% now under Omicron. Apparently the correction of 4.40% now under Omicron is very less compared to its fall of 10.45% during Covid.
Time will tell whether S&P 500 is going to correct more under the affect of Omicron or not. However, technically we can say that, “If
S&P 500 is closing below 4,488 on a weekly basis and it’s low is taken out then we can have the following price targets of
S&P 500 under the affect of Omicron:
1. 4,478
2. 4,451
3. 4,441
4. 4,385
5. 4,372
6. 4,367
7. 4,325 and
8. 4,300
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