{"id":163885,"date":"2020-01-25T09:11:36","date_gmt":"2020-01-25T14:11:36","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=163885"},"modified":"2020-01-25T09:11:36","modified_gmt":"2020-01-25T14:11:36","slug":"the-wuhan-wipeout-could-it-happen","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/01\/the-wuhan-wipeout-could-it-happen\/","title":{"rendered":"The Wuhan Wipeout – Could It Happen?"},"content":{"rendered":"
January 25, 2020<\/div>
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By TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n

News is traveling fast about the Corona Virus that originated in Wuhan, China.\u00a0 Two new confirmed cases in the US, one in Europe and hundreds in China.\u00a0 As we learn more about this potential pandemic outbreak, we are learning that China did very little to contain this problem from the start.\u00a0 Now, quarantining two cities and trying to control the potential outbreak, may become a futile effort.<\/p>\n

In most of Asia, the Chinese New Year is already in full swing.\u00a0 Hong Kong, China, Singapore, Malaysia, India and a host of other countries are already starting to celebrate the 7 to 10 day long New Year.\u00a0 Millions of people have already traveled hundreds of thousands of miles to visit family throughout this massive celebration.\u00a0 We are certain that hundreds or thousands have traveled to all parts of the world by now.\u00a0 The potential for exponential growth in the threat from this virus could be just days or weeks away.<\/p>\n

Far too many people are too young to have any knowledge of the 1855 Third Plague Pandemic that originated in China.\u00a0 This outbreak quickly spread to India and Hong Kong and claimed 15 million victims.\u00a0 It lasted until the 1960s when active cases of the Plague dropped below a couple hundred.<\/p>\n

If we consider the broader scope of this issue, we have to take into consideration the results it may have on the broader global economy, commodities and consumer activity as skilled traders.<\/p>\n

The world is much bigger than it was in 1855.\u00a0 We have more technology, more capability and faster response capabilities related to this potential pandemic.\u00a0 Yet, we also have a much greater heightened inter-connected global economy, currency, and commodity markets.\u00a0 What happened in China can, and may, result in some crisis events throughout the planet.\u00a0 It is not the same world as it was in 1855. (Source: history.com<\/a>)<\/p>

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It is far too early to speculate on any future economic outcomes related to this potential outbreak, but it is fairly certain that China, most of Asia, India and potentially Africa could see extensive economic damage related to a contraction in consumer and industrial economic demand as a consequence of this outbreak.\u00a0 Once the Chinese New Year ends, in about 10 to 15+ days, people will return back to their home cities and we\u2019ll begin to understand the total scope of this problem.\u00a0 If the problem continues to be isolated in China, Asia and within that general region, then we may see economic consequences isolated to these regions.\u00a0 If not, then we could see a much bigger and broader global economic consequence setting up.<\/p>\n

The 1855 Plague Pandemic lasted for nearly 100 years and wiped out 1.25% of the total global population.\u00a0 This was at a time when air travel was very limited and global economics was a much smaller component of the total global economy.\u00a0 Everything is somewhat isolated at that time. In today\u2019s world, a similar type of event could wipe our 1% to 5% of the total global population before we have any means to attempt to control it.<\/p>\n

Bill Gates believes this outbreak could kill more than 30 million people within 6 months (Source: businessinsider.com<\/a>)<\/p>\n

It is time to get real about this and prepare for how the global markets will interpret this potential outbreak.<\/p>\n

We\u2019ve been warning that the market was \u201cRallying To A Peak\u201d recently and believe this outbreak has changed the minds of traders.\u00a0 This could the catalyst that breaks the bullish trend for quite a while.\u00a0 Skilled traders will be trying to get ahead of this rotation in the markets and attempt to deleverage risk.\u00a0 As retail traders, we should be doing the same thing \u2013 deleveraging risk, buying metals, trimming open long positions and hedging into inverted ETFs.<\/p>\n

Daily ES Chart<\/h3>\n

This Daily ES chart highlights a very real support level near 3050 that also aligns with the longer-term Moving Average.\u00a0 A downside move like this would represent a -10 to -11% downside price reversion and take us back to December 2019 price levels.\u00a0 It could happen very quickly.<\/p>\n

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Transportation Index Chart<\/h3>\n

This Transportation Index chart highlights a potential downside price reversion of -11% to -12% \u2013 targeting the 9,750 level.\u00a0 We\u2019ve recently authored an article about the weakness in the Transportation Index<\/a><\/strong> and how we believe it could be setting up for a downward price move.\u00a0 If a breakdown move like this happens in TRAN, it would suggest a massive contraction in the global economy is taking place.<\/p>\n

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DOW JONES (YM) Daily Chart<\/h3>\n

This last YM chart highlights support near 28,000 which would be an immediate downside target if the Dow Jones Industrials revert lower.\u00a0 And, again, this would put us back to December 2019 price levels.\u00a0 If this 28,000 level is broken, then we start looking at levels closer to 26,000 (roughly -20%).<\/p>\n

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Concluding Thoughts:<\/h3>\n

Right now, consider this situation as you are a captain of a ship sailing into a storm.\u00a0 You can either prepare for it and navigate through it to the best of your ability or ignore the warnings and hope for the best.\u00a0 It is far too early to panic at this point, but a certain degree of \u201cpreparation\u201d is certainly in order.<\/p>\n

We\u2019ll know more in about 7+ days as we learn how far and how wide this problem has actually extended.\u00a0 In the meantime, watch your investments.\u00a0 Protect your assets.\u00a0 Prepare for the storm.\u00a0 Best case, you can always reposition your capital for clearer skies in a few weeks.<\/p>\n

As a technical analysis and trader since 1997 I have been through a few bull\/bear market cycles, I have a good pulse on the market and timing key turning points for both short-term swing trading and long-term investment capital. The opportunities are massive\/life-changing if handled properly.<\/p>\n

Join my\u00a0Wealth Building Newsletter<\/strong>\u00a0if you want winning ETF swing trade alerts every month? Then ride my coattails as I make money while others will struggle and lose money as the markets correct and become more volatile.<\/p>\n

Chris Vermeulen
\nTheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n

NOTICE: Our free research does not constitute a trade recommendation or solicitation for our readers to take any action regarding this research.\u00a0 It is provided for educational purposes only.\u00a0 Our research team produces these research articles to share information with our followers\/readers in an effort to try to keep you well informed.\u00a0 Visit our web site (www.thetechnicaltraders.com) to learn how to take advantage of our members-only research and trading signals.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders.com News is traveling fast about the Corona Virus that originated in Wuhan, China.\u00a0 Two new confirmed cases in the US, one in Europe and hundreds in China.\u00a0 As we learn more about this potential pandemic outbreak, we are learning that China did very little to contain this problem from the start.\u00a0 Now, quarantining […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-163885","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/163885","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=163885"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/163885\/revisions"}],"predecessor-version":[{"id":163886,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/163885\/revisions\/163886"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=163885"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=163885"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=163885"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}