Suffering another nasty whipsaw the indexes fell into correction territory with the worst week of selling since Oct. 2008.  We could certainly use some good news to lift the market spirits but as of now there seems to be only bad news as the outbreak continues to spread.  Moody’s now places the offs of a global recession at 40% due to the impact of the outbreak.  As we head into another weekend of uncertainty all we do is hope for the best prepare for the worst.  When this is over there will be some screaming deals on very good stocks, but for now the wise thing to do is protect your capital.

Asian markets close the week with heavy volume selling as a portion of Japan declared a state of emergency.  European markets continue to selloff strongly this morning declining as much as 4%.  After a wild night where the Dow Futures dropped another 500 they have recovered slightly but continue to point to a bearish open.  Hold on tight and expect extreme volatility to continue as we approach the uncertainty of the weekend.

On the Calendar

On the Friday earnings calendar we get a little break with only 70 companies reporting.  Among the notable are FL, SSP & W.

Action Plan

With another huge whipsaw we ended the day selling off more than 1100 Dow points.  In just 6-trading days we have gone from new record highs into full correction with indexes down more than 10% in the worst week since October 2008.  I would love to say the worst of the selloff is over but as we head into the uncertainty of the weekend we could easily see more selling.  Global markets have now erased more than 5 trillion as the virus continues to spread.  Schools in Iran have now been closed and Japan has closed schools for a month with one area of the country declaring a state of emergency.  Moody’s has now raised the chance of a global recession to 40%. 

When you take a look at the index charts it hard to find anything technically traders can base any logical decision as to what comes next.  With panic in full bloom and extreme price volatility trading now is little more than wild speculation and gambling.  During the night Dow futures dropped another 500 points but have since recovered some of those losses currently indicating a gap down.  However, a retest of the overnight lows after the open is not out of the question.  In fact, as we head into the weekend the worry we face is will the low overnight hold? 

Trade Wisely,

Doug

After a will day of volatility where the Dow whipsawed more than 650 points closed the day lower as fear and uncertainty dominate the price action.  Though indexes appear very oversold in the short-term futures indicate another substantial gap lower this morning with the CDC announcing our first community spread incident of the virus.  As much as we all want some selling relief the conditions suggest this could get much worse before it gets better.  Anticipating a bounce with a buy the dip mentality could prove very dangerous in the days ahead.

Asian markets closed mixed overnight with Japan sinking 2% with the South Korean central bank holding rates unchanged.  European markets are decidedly bearish this morning declining more than 2% with the outbreak continuing to spread.  Ahead of our biggest day of earnings reports and a busy economic calendar US Future point to Dow gap down of more than 350 points.  Expect fast price action, news-driven reversals and intra-day whipsaws to continue as we head into the weekend.

On the Calendar

On the Thursday earnings calendar is the biggest day of reports this week with more than 325 companies fessing up.  Notable reports include AMC, BUD, ADSK, BIDU, BBY, BYND, CROX, CRON, DELL, DISCA, EOG, EQT, FLIR, FRO, GCI, GNC, IQ, JCP, JD, KDP, MAIN, MYL, NLSN, NRG, PRGO, RRC, SRE, SWCH, TTD, TD, VMW, WDAY.

Action Plan

Yesterday’s 650 point whipsaw in the Dow shows the market stress as it struggles to come to grips with the virus impacts.  The CDC announced that a woman in California tested positive for the virus and is now the first community spread case in the US.  The news reports on the spread of the virus around the world are becoming increasingly grim as health agencies struggle to inhibit the expansion.  Companies continue to warn of substantial financial impacts and uncertain markets continue to fall.  Where this ends is anyone’s guess but for now price volatility will continue to make trading very challenging and traders should prepare for the fact this could get a lot worse before it gets better.

Technically speaking indexes are oversold but in this situation market fears could continue to drive the markets lower.  I suspect we could soon experience more drawdowns with mutual fund redemptions and 401 plan holders shifting to money markets to protect their capital.  The cascading effect can trap traders trying to buy the dip attempting to anticipate an oversold bounce or relief rally.  It will take a significant time for the daily charts to recover to the point that bullish patterns can appear.  With the high volatility this is a Day Traders market.  Swing and position traders will find this to be very challenging and dangerous.  Remember that cash is positon and just because the market is open you should not be compelled to trade it until conditions improve.  Protect your Capital!

Trade Wisely

Doug

With the CDC warning of a substantial coronavirus breakout in the US markets extended its losses with the Dow sinking more than 1900 points in the just 2-days.  There was such a demand for the relative safety of treasury bond the 10-year yield fell to a record low and oil dropped below $50 a barrel.  What happens next is anyone’s guess as markets around the world grapple with the economic uncertainty of this very contagious outbreak.

Asian markets closed in the red across the board and European markets continue to sell off this morning.  US Futures have been all over the map this morning facing a big day of earnings and economic reports.  With trends and key support levels broken we can expect highly volatile price action to continue as we sort through the wreckage of the last 2-days.

On the Calendar

On the hump day earnings calendar, we have more than 250 companies reporting quarterly results.  Notable reports include LOW, SQ, TDOC, AMCX, APA, BKNG, BOX, CARS, CNVA, CHK, DAKT, EV, ETSY, STAY, TWNK, SJM, KW, LB, MAR, MNST, NTES, NDLS, ODP, PZZA, DOC, SEAS, TJX, TCOM, UPWK, VIPS, WB, WEN & WYND.

Action Plan

After a 2-day selloff that dropped the Dow more than 1900 points triggering more market selloffs around the world.  With the CDC now expecting a substantial breakout to occur in the United States 10-year treasury bonds dropped to their lowest levels in history while oil fell below $50 a barrel.  Travel stocks such as airlines, cruise lines and travel booking company’s plummetted as did health insurers and health care related stocks.  The South Korea outbreak jumped to nearly 1150 confirmed cases and reported 11 deaths.  With possible vaccine’s still months away it would seem this situation will get significantly worse before it gets better.  The uncertainty of the potential economic impacts is likely to keep the market on edge and volatile in the weeks ahead.

With trends broken and prices slicing through multiple price support levels all at once traders will find it very difficult to find there way back into the market with the high risk of news-driven reversals.  During the night US Futures whipsawed from triple points up to triple points down as shellshocked trader’s emotions continue to vacillate.  Normally one would assume we have reached a short-term oversold condition a relief rally is due to begin but this is not a normal situation and traders should prepare for just about anything.  With a huge day of earnings reports and a couple of key economic reports on the calendar expect highly volatile price action to challenge even the most experienced traders.  Remember cash is a position and there is no shame in watching from the sidelines as the uncertainty continues to unfold.

Trade Wisely,

Doug

In one fell swoop virus fears wiped out 2020 market gains with the biggest day of price volatility the market has experienced in a very long time.  Though it may have been an overreaction the growing uncertainty of coming economic impacts is likely to keep the market on edge and price volatility very challenging for the near future.  We should expect very fast price action, news-driven intra-day reversals and whipsaws as the market grapples with not only the virus fall-out but the rising candidacy of Birnie Sanders.

Asian markets closed mixed but mostly lower with Japan plunging more than 3% overnight.  European markets are once again negative across the board after a turbulent day of selling on Monday.  US Futures have been all over the map in the last 12 hours as they try to sort out what comes next.  However, with some positive earning reports the bulls have found some inspiration and currently point to bullish open. 

On the Calendar

On the Tuesday earnings calendar, we have nearly 200 companies fessing up to quarterly results.  Notable reports include SPCE, ALRM, AMRN, AMT, AGR, BGS, BMO, BNS, BCC, CZR, CSGP, CBRL, FRPT, GWPH, HD, TREE, LL, M, MNK, MANU, PLNT, PBPB, PSA, RLGY, RRGB, RHP, CRM, SDC, REAL, TRI, TOL, TUP, WWW & WW.

Action Plan

Yesterday selling wiped out this year’s gains in one fell swoop in reaction to the potential economic impacts of the spreading virus outbreak which has now reached 22 countries.  As the number of infections seems to be in decline in China, outbreaks in Italy, Iran and a rapidly expanding infections in South Korea have investors on edge.  Oil prices fell sharply on Monday as world demand continues to decline with factory closures and massive travel restrictions extend.  Another area hit hard yesterday was the healthcare and insurance sector with investors reacting negatively as Birnie Sanders gains traction in his campaign.  A spreading virus and a socialist agenda combined energized the bears spiking price volatility making a very dangerous trading condition at least for the short-term.

After the bell the futures market tried to bounce back sharply but the pressure of the markets around the world continuing to slip south those early gains eroded during the night.  However, with a big day of earnings reports futures markets are once again trying to rebound now pointing to modest gains at the open.  That said, the pre-market price action is very volatile and traders should prepare for just about anything with a market highly emotional and growing uncertainty.  This is not a market for inexperienced traders!  Even very experienced traders may find today’s price action very challenging with very quick reversals and whipsaws as virus news continues to roll out.  If you do decide to trade it may be wise to consider smaller than normal positions and as always plan your risk carefully.

Trade Wisely,

Doug

The ability to ignore the impacts of the virus impacts shifted to pure panic over the weekend with world markets selling off dramatically.   A common reaction for traders is to join in the panic or assume its an over-reaction and rush in to buy the dip.  Today we should expect violent whipsaws in the stock and index prices, creating very dangerous conditions for even the most experienced traders.  The emotional price swings may not respect price support and resistance levels.  Stay calm, protect your capital and avoid revenge trading.

Asian markets closed down across the board overnight and European markets are sharply lower with the outbreak spreading across Italy.  Although we have a big day of earnings reports the market has now turned its attention to economic impacts and the fear of its rapid spread around the world.  Today is a day to exercise discipline, follow your rules, staying calm and focused on avoiding emotional-charged decisions.

On the Calendar

On the Monday earnings calendar, we have more than 130 companies reporting quarterly results.  Notable earnings include AWR, CTB, DDS, DIN, EPR, HTZ, HPQ, INTU, KTOS, OKE, PANW, APTS, RCII, SHAK, & THC.

Action Plan

Friday’s price action raised red flags as the bears became more aggressive, heading into the uncertainty of the weekend.  Warning signs continue to grow as safe haven plays such as GLS, SLV, XLU & defensive sector stocks rallied sharply.  With news over the weekend that the virus outbreak has spread to 22 countries, fear has quickly shifted to panic overnight as world markets drop dramatically.  With oil demand continuing to fall, there is speculation that per barrel oil prices could quickly decline sharply lower.  During the night, Dow futures fell more than 800 points but are currently trying to bounce off of those lows though continue to point to painful losses this morning. 

Although I sounded like a broken record with daily warnings to not over-trade such an extended market. A market that was choosing to ignore economic impacts turned out to have been the right thing to do.  Today will be a very emotional market reaction and a very dangerous day of violent price action and high volatility.  Try not to panic and avoid emotional-based decisions.  Expect substantial intra-day whipsaws in the market that may not hold at support and resistance levels.  This kind of panic environment is dangerous to trade for even the most experienced traders.  Protecting your capital is the best course of action and don’t get caught up in the buy the dip crowd or revenge trading because the impact of this outbreak is likely to be far-reaching.

Trade Wisely,

Doug

With an ugly whipsaw in price action, the bears reminded us yesterday they are still here, and like it or not, this rally will not go up forever.  A rude awakening for traders overtrading or chasing already extended stocks.  Overnight we learned of outbreaks in China prison populations, South Korea and Iran, while Japan extended business closures.  As we head into the weekend, it will be interesting to see if the uncertainty will bring out the profit-takers or if bulls will continue to buy despite the economic warnings.  No matter which side wins the day, I suspect price volatility will add significant complexity to the decisions ahead.

With new outbreaks in both men and women prison populations, Asian markets closed the week mixed but mostly lower.  European markets are improving as the morning goes on but are modestly in the red across the board.  US Futures are also coming off morning lows ahead of economic and earnings reports but continue to point to a modestly bearish open.  Plan your rick into the uncertainty of the weekend very carefully as the economic impacts continue to grow.

On the Calendar

On the Friday earnings calendar, we get a little break with less than 60 companies reporting quarterly results.  Notable reports include B, CNK, DE, ERF, MGA, RY & WPC.

Action Plan

A wild day of price action yesterday gapping lower on after a warning from Goldman but quickly rallying back up to price resistance.  After banging against the resistance several times, the bears launched a strong attack with the Dow plunging more than 300 points, then reversing once again trimming losses to just 128 Dow points.  A guy could get whiplash with that kind of price action!  During the night virus fears seemed to grow as Japan extended business closures and outbreaks expanded in South Korea and Iran.  Hundreds of new confirmed cases were reported in China last night with an outbreak in prison populations of both men and women. 

The big recovery yesterday left behind a bunch of Hammer Candle Patterns at or near price support levels, likely adding hope of a rally for today.  Unfortunately, fears of new outbreaks have markets around the world under some selling pressure this morning.  It will be interesting to see if the uncertainty of the weekend will inspire the bears to reengage or if the bulls will continue to have the willingness to ignore the future economic impacts.  Although redundant, I will continue to warn about overtrading and to plan your risk carefully heading into the weekend.  Yesterday’s wild price action may have been a warning shot over the bow that more volatility is close at hand.

Trade Wisely,

Doug

The SP-500 and Nasdaq break through the clouds of uncertainty printing new records while the Dow and Russell close just below key resistance levels.  As the bulls relentlessly power forward, China’s Hubei province extends business closures to March 11 and the Commerce Ministry warns of long-term impacts on labor-intensive industries such as manufacturing and food production.  Goldman has now added a warning stating a “short-term correction is looking much more probable.”  We will soon find out what the bulls think of that these warnings.

Asian markets closed flat to mostly lower overnight, and the European markets are modestly lower or near the flatline this morning.  US Futures ahead of the biggest day of earnings reports this week point to a slightly lower open this morning.  If all the warnings help the bear engage, watch for an increase in price volatility.  However, I would not expect the bulls to give up easily as they work to extend this amazing run. 

On the Calendar

On the Thursday earnings calendar, we have our biggest day this week, with more than 230 companies fessing up to results. Notable reports include AAN, AKS, AEP, BTD, COG, CLF, ED, CVA, DPZ, DBX, EHTH, ENV, EQM, FSLR, GLPI, GIL, HFC, HRL, I, LAMR, NCLH, PPC, RMAX, SIX, SO, SFM, TXRH, TRUE, OLED, VTR, VIAC, & WIX.

Action Plan

With a mighty bullish push, the SP-500 and the Nasdaq put new record highs in the books.  Absolute Breadth Index continues to decline, indicating fewer and fewer companies are supporting the extended rally.  Last night Goldman chimed in on the virus economic concerns saying, the market has underestimated the coronavirus impacts with the current stock prices.  “While a sustained bear market does not look likely, a near-term correction looking much more probable,” according to Peter Oppenheimer.  China’s Hubei province has once again extended business closures to March 11^th as they continue to battle to contain the virus spread.  The Commerce Ministry in China also warned of possible long-term impacts on key sectors such as labor-intensive industries.

While the SPY and QQQ broke out of the clouds to blue skies yesterday, the DIA and IWM closed the day just below key resistance levels.  Trends remain very bullish, and there seems to be no price too high on several tech giants as buyers continue to snap them up despite warnings and parabolic price patterns.  Traders should guard themselves from overtrading and chasing extended stock prices well above price supports.  Ahead of a big day of earnings and economic reports, US Futures appear slightly more cautious this morning after the Goldman warning. 

Trade Wisely,

Doug

Virus, we don’t care about no stinking virus!  After AAPL warned of substantial impacts creating a selloff, the bulls seem to have regained control as even AAPL rallied by the end of the day.  China’s media censorship has mainstream news outlets like CNBC questioning the validity of reports out of the region as three Wall Street Journal reporters were expelled from the country today.  No price seems to high for some tech companies as the push for record highs continues.  Don’t bother us with warnings; we want a 30,000 Dow!

Asian markets closed mixed but mostly higher overnight, and European markets are green across the board this morning.  US Futures opened bullish last night and stayed the way all night currently pointing to a bullish open ahead of a big day of earnings reports and the release of the FOMC minutes at 2 PM Eastern today.  Continue to expect news-driven reversals and the possibility of big overnight gaps as the outbreak uncertainty warnings continue to come out despite the willingness of the market to ignore them.

On the Calendar

On the Hump Day earnings calendar, we have a big day with nearly 190 companies reporting.  Notable reports include SAM, ALB, CAR, BHC, ARPN, FUN, CAKE, CDE, DISH, ET, ETR, FVRR, FOSL, GRMN, GPC, HST, H, NTES, OC, PXD, O, STMP, VIPS, WMB, & ZG.

Action Plan

After a selling pullback after AAPL warned of substantial virus impacts, the bulls seemed to regain control by the close.  Even AAPL itself rallied by the end of the day as the bulls choose to ignore company warnings.  Jaguar and Land Rover said they only have about 2-weeks of parts left, and Adidas warned this morning that their business activity in China dropped 85%.  With confirmed cases continuing to rise, futures markets have traded in the green all night long.  Three Wall Street Journal reports have been expelled from Chiana as the government censorship of the news clamps down tighter to control the narrative. 

If the market wants to ignore and push higher all, we can do as traders is to continue to follow the price action.  However, we should be very careful not to over-trade and take profits quicker because of the possibility of large morning gaps, and news-driven reversal risk remains very high.  Several big tech stocks have moved into parabolic patterns as it seems traders have decided that no price is too high to pay for market leaders.  A condition that’s very reminiscent of the tech run-up in 1999.  Choose your trades wisely and avoid chasing stocks at or near resistance or those already several days up in their current run. 

Trade Wisely,

Doug

Coronavirus economic impacts continue to grow as AAPL & HSBC joins the chorus of companies warning of sales and revenue declines due to the outbreak.  The early morning earnings miss my WMT only added to the selling pressure on the indexes this morning as markets around the world try to come to grips with the economic uncertainty.  With a short week filled with earnings and economic reports, we should plan for significant price volatility, news-driven reversals and potentially large morning gaps.  I would not expect the bulls to give up their quest to reach out to Dow 30,000 easily but I think it would be wise to expect the bears to become more aggressive as the virus impact grows.

Asian markets closed mixed but mostly lower as Moody’s lowers China’s economic growth projection.  European markets see only red this morning as German confidence sharply declines due to outbreak trade pressures.  US Futures this morning point a Dow gap down of more than 150 points ahead of a big day earnings reports.  Expect just about anything in the days ahead as the bulls and bears grapple with the unknown future impacts of the outbreak.

On the Calendar

On the Tuesday earnings calendar, we have over 140 companies reporting quarterly reports.  Notable reports include WMT, AAP, ACC, AWK, BLMN, DVN, ECL, EXPD, EXR, FLR, GRPN, HLF, LZB, LDOS, LC, MDT, & TRU.

Action Plan

Over the long weekend, coronavirus infections continue to expand with Singapore, and Japan is now warning of recession as a result.  APPL has now joined the chorus of companies that expect product delays, declining sales, and revenue projections as a result of the outbreak.  This morning German investor confidence sharply deteriorated as fears grow of significant world trade impacts.  Moody’s has once again lowered China’s economic growth forecast from 5.8% to 5.2% for 2020 with Macao and Hong Kong expected to face the biggest hit.  The London based HSBC which earns most it’s profits from Asia, is bracing for a first-quarter impact with longer-term effects throughout 2020. 

As a result, it’s not a surprise that markets around the world are reacting negatively over the last 12 hours.  Facing a short week of trading with a large number of earnings reports and a busy economic calendar, traders should expect substantial price volatility in the days ahead.  The bulls will not give up this rally easily with Dow 30,000 within reach.  On the other hand, with economic growth concerns growing, we should expect the bears to become increasingly aggressive as the outbreak impacts come to light.  Plan your risk carefully and don’t be surprised by news-driven reversals and large market opening gaps as the market wrestles with the uncertainty.

Trade Wisely,

Doug

The virus outbreak grows and more and more companies warn of future impacts, but the bulls keep marching higher without fear.  Yesterday, Guggenheim Partners Global CIO, said that the GDP Growth in China’s first-quarter could be as a negative 6% and went on to say, “We are in a ludicrous season.”  If he right, we may have trouble time ahead, but for now, the bulls are in control and buying is all they seem to have on their minds. 

Overnight Asian markets closed mixed but mostly higher as Singapore warns of recession risk, and more than 4000 new cases of infection reported.  European markets are trading cautiously mixed but mostly higher this morning.  US Futures are green across the board but modestly so ahead of earnings and a big economic calendar data dump.  With the uncertainty of the 3-day weekend, will the bulls continue to drive upward or might there be some profit-taking? 

On the Calendar

On the Friday earnings calendar, we get a little break with less than 50 companies reporting results today.  Notable reports include AL, ABR, AZN, CGC, MGP, NWL, PPL, TRTN, & YNDX.

Action Plan

What is there about this market?  Bulls are in control and they seem to be on a mission to push the Dow to 30,000 no matter what.  Companies continue to issue warning after warning that the virus outbreak will have and impact going forward but prices continue to increase as if there is no price too high to buy.  The quote below says it much better than I.

Guggenheim Partners Global CIO Scott Minerd said in a letter to clients that the elevated prices in financial markets show a “cognitive dissonance” from economic reality that has created a dangerous bubble among debt assets.

“This will eventually end badly. I have never in my career seen anything as crazy as what’s going on right now,” Minerd said.

Guggenheim Partners Global CIO Scott Minerd said in a letter to clients that the elevated prices in financial markets show a “cognitive dissonance” from economic reality that has created a dangerous bubble among debt assets.

“This will eventually end badly. I have never in my career seen anything as crazy as what’s going on right now,” Minerd said.

“We are either moving into a completely new paradigm, or the speculative energy in the market is incredibly out of control. I think it is the latter. I have said before that we have entered the silly season, but I stand corrected,” Minerd said at the end of his letter. “We are in the ludicrous season.”

My question, ss we head into a 3-day weekend will the bulls continue to drive higher without regard to coming impacts or will traders and investors take profits due to the uncertainty.  As for me, I plan to go into the weekend very light in my accounts.

Trade Wisely,

Doug