{"id":164637,"date":"2020-02-07T16:24:00","date_gmt":"2020-02-07T21:24:00","guid":{"rendered":"https:\/\/www.countingpips.com\/?p=164637"},"modified":"2020-02-07T16:24:27","modified_gmt":"2020-02-07T21:24:27","slug":"is-the-coronavirus-bullish-for-stocks","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2020\/02\/is-the-coronavirus-bullish-for-stocks\/","title":{"rendered":"Is The Coronavirus bullish for Stocks?"},"content":{"rendered":"
February 7, 2020<\/div>
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By TheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n

Earnings volatility has certainly been big.\u00a0 Tesla pushed the markets much higher early this week and the US stock markets have continued the upward momentum after the State Of The Union address and the acquittal of President Trump on Wednesday.\u00a0 Still, we continue to believe this rally may be a \u201cfake-out\u201d rally with respect to the fallout from the Wuhan virus.\u00a0 Certainly, foreign investors are continuing to pour capital into the US stock market as the strength of the US Dollar and the strong US economy is drawing investment from all areas of the globe.<\/p>\n

We believe the scope of this parabolic rally in the US stock market should actually concern skilled traders.\u00a0 Markets just don\u2019t go straight up for very long.\u00a0 The last time this happened was in the 1970s and 1980s.\u00a0 Very minor volatility during that time prompted a big move higher in the US stock market that set up the eventual DOT COM collapse.<\/p>\n

Oil, Shipping, Transportation, Consumer, Manufacturing, and Retail will all take a hit because of the Wuhan virus.\u00a0 We\u2019ve, personally, received notices from certain suppliers that factory closures in China will greatly delay the fulfillment of orders.\u00a0 Our opinion is that nations may have to close all or a majority of their cities, ports, and activities in Asia for at least 90+ days in order to allow this virus event to peak and subside.\u00a0 We don\u2019t see any other way to contain this other than to shut down entire cities and nations.<\/p>\n

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The US Fed and Central Banks are doing everything possible to continue the economic growth and stability of global economics.\u00a0 Yet, the reality may suddenly set in that without risking a global virus contagion, nations may be forced to actually shut down all non-essential activities for well over 90+ days (possibly even longer).\u00a0 If you could stop and consider what it would be like for half of the world, and many of the major manufacturing and supply hubs, to shut down for more than 3 to 6 months while a deadly virus is spreading.<\/p>\n

Repo lending continues to show that liquidity is a problem.\u00a0 We believe this problem could get much worse.\u00a0 Skilled traders need to be prepared for a sudden and potentially violent change in the direction of the global stock markets.<\/p>

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$TNX \u2013 10 Year US Treasure Yield Daily Chart<\/h3>\n
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30 Year Treasury Bond Price \u2013 Daily Chart<\/h3>\n

There is now a solid wall of inversions in all the treasury notes and bills.\u00a0 The 10-year yield is inverted with 6-month and shorter durations.\u00a0 The 30-year long bond dipped below 2.0% for the third time and is just 6 basis points from a record low.<\/p>\n

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Prepare to capitalize on this \u201ccrowd behavior\u201d in the near future.\u00a0 Right now, the US stock market is pushing higher as Q4 earnings drive future expectations.\u00a0 Yet, be prepared for the reality of the situation going forward.<\/p>\n

This Wuhan virus may present a very real \u201cblack swan\u201d event.\u00a0 At the moment, the US stock market appears to want to rally as earnings and economic data continues to impress investors.\u00a0 Overall, the real risk to the markets is a broader global economic contagion related to the Wuhan virus and the potential it may have on foreign and regional economies.<\/p>\n

Next week is going to be critical for many things I feel. Virus contagion growth, factory closures<\/a><\/strong>, Oil breakdown follow through, equities breakout follow through, and the precious metals pending move.<\/p>\n

We locked more gains this week with one of our positions as we rebalance our portfolio holdings for these new big trends to emerge. If you want to know where the markets are moving each day and follow my trades then join my ETF Trading Newsletter<\/strong>.<\/p>\n

Chris Vermeulen
\nTheTechnicalTraders.com<\/u><\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By TheTechnicalTraders.com Earnings volatility has certainly been big.\u00a0 Tesla pushed the markets much higher early this week and the US stock markets have continued the upward momentum after the State Of The Union address and the acquittal of President Trump on Wednesday.\u00a0 Still, we continue to believe this rally may be a \u201cfake-out\u201d rally with […]<\/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-164637","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/164637","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=164637"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/164637\/revisions"}],"predecessor-version":[{"id":164638,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/164637\/revisions\/164638"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=164637"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=164637"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=164637"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}