Minsky Moment will be witnessed in the upcoming times by the markets of US

Markets are witnessing the most depressing period since the past few months. The prices of assets can collapse and go a lot low then in the month of March. We can possibly witness a “Minsky moment,” as per Ron William, market strategist and founder of RW Advisory. Minsky Moment refers to a sudden collapse in the market. It is followed by an unsustainable bull run. It can also go high by the “easy credit” environment created as a result of unprecedented fiscal and monetary stimulus measures as per the report by CNBC.

There are a number of factors through which this can happen. One of the main reasons for this crash is recent low market gains. As per the words of Ron William, “If we look at the equal-weighted index of the S&P 500, it has barely broken above its June peak and has actually been flatlining ever since, so we can see there the ’FAANG-tastic divergence, as I call it.” Although, the big US technology companies are still continuing to see momentum. However, all of the other industries are destroyed by the coronavirus pandemic.

As per Ron William, the Minsky Moment will definitely witness a great fall in the value of assets. The fall will be by 20% to 30%. This is a great decrease in value. It can cause the current “V-shaped” recovery to lead to a “rolling W retest of the March crash low.” The S&P also fell to 2,237.4 on March 23. However, it closed to 3,580.84 this Wednesday. The researcher further also said that a multi-year repair period can be witnessed very soon. The market will be definitely looking for correction pockets.  The correction pockets will be spotted as combined with high valuations, negative seasonality of the late-August period and early-September period. Plus, with the upcoming election cycle in the US.