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

Bearish virus fears and bullish earnings reports will duke it out for control today after a surprising increase in confirmed cases and deaths.  The bulls clearly want to ring the 30,000 Dow bell, but this pesky microscopic virus might stand in the way.  With the confirmed cases surging to more than 48,000 and an increase of 242 deaths, the likely economic impacts are growing more difficult to ignore.  Expect substantial price volatility as the bulls and bear duke it out and remember we now face the uncertainty of a 3-day weekend.  At the risk of sounding like a broken record, avoid over-trading and consider your risk carefully.

Asian markets closed down across the board with business closures extended until the 21^st.  European market are decidedly bearish this morning trading in the red across the board as virus fears rise.   US Futures point to a nasty gap down overnight reversal ahead of a big day of earnings and economic data.  Fasten your seat-belt; this could be a bumpy ride heading into a long weekend.

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 ROKU, NVDA, ANN, AEM, BABA, AIG, AVP, BAM, CC, DLR, DISH, EXPE, FTS, GNC, GDDY, IRM, KHC, LH, MANU, MAT, PEP, R, SSTK, TRUP, WM, WH, AUY, YELP, YETI, & ZTS.

Acton Plan

Although a very big day of earnings reports, the market is facing a nasty overnight reversal this morning as the virus outbreak comes back into focus.   China said it confirmed more than 15,000 new cases and 254 additional deaths bring the death toll to more than 1300.  Total cases now exceed 48,000.  Global oil demand expects to see it the first quarterly decline in over 10-years as a result of the outbreak.  Hubei province once again extended business shutdowns to Feb, 21, and Hong Kong extended school closures for the 3^rd time in the virus battle.  One has to wonder with this huge surge in confirmed cases and a 3-day weekend just around the corner if the fear of uncertainty will begin to encroach on the unbridled bullishness of late.

After the bell yesterday, AMAT made investors cheer with stock leaping nearly 3% but NTAP and CSCO disappointed with share prices dropping 12% and 4.5% respectively.  Before the bell today, BABA reports, and it will be very interesting to find out if the outbreak helped or hurt the huge online retailer.  Overnight reversals such as the one we face this morning are not only damaging to those unprepared but also brings the possibility of a big emotional response.  Remember it was only 10-days ago when the Dow dropped 600 points on virus fears.  I have to wonder what kind of reaction could be possible after rallying more than 1200 points in 9-days as we approach the uncertainty of a 3-day weekend.  Expect significant price volatility in the days ahead.

Trade Wisely,

Doug

Don’t bother us with warnings of possible virus economic impacts; we’ve got money to spend no matter how high the price rises!  LOL, a little sarcasm as the bulls continue to the relentless push higher while more central banks warn of the financial and economic effects of the outbreak.  Even though some profit-takers took advantage of yesterday’s morning gap the SP-500 and the Nasdaq held on to new closing record highs.  What looked like the setup for a possible pullback by the end of the day now appears to have been just a brief rest as the bulls continue to party like its 1999.  Stay long, continue to profit, but be very careful chasing already very extended stocks.

Asian markets shrugged off the virus’s concerns surging upward and closing green across the board.  The European markets also in rally mode this morning and decidedly bullish across the board.  Ahead of more than 150 earnings report and busy day Fed speak US Futures once again leap higher with the Dow expected to gap more than 100 points.  Buckle up and enjoy the ride.

On the Calendar

On the Hump Day earnings calendar, we have a busy day with just over 150 companies reporting results.  Notable reports include AB, NLY, AMAT, ARCC, ARES, GOLD, BG, CTL, CSCO, CAME, CVS, EFX, EQIX, FOSL, HUBS, IPG, LGC, MRO, MGM, SHOP, TAP, MCO, NTAP, NBL, STAG, SPWR, TEVA, TRIP, TRVG, & WELL.

Action Plan

Bernie Sanders comes out as a de-facto leader after a narrow win in New Hampshire with former Vice-President Joe Biden slipping to 5^th place showing.  Latecomer Mike Bloomberg has chosen not to participate in the first few contests placing his bet not on the people but instead on the hundreds of millions he is willing to spend to bypass the process.  The outbreak numbers continue to grow with several more central banks sounding the alarm of financial and economic impacts.  With more than 44,000 confirmed cases and over 1100 dead the market continues to charge forward definitely.  Though parabolic chart patterns have developed in some of the leading stocks, investors seem willing to cover their eyes hold their nose and buy no matter the elevation. 

Although the morning gap found some profit-takers, the SP-500 and Nasdaq both squeaked out new closing record highs while the DIA closed flat.  What looked like a possibility of a pullback developing now appears to have been nothing more than a little rest with the US Futures pointing to another gap up open.  So with a big day of earnings reports and another busy day of Fed speak lets party like its 1999!  Then again, if you’re like me disciplined to a trading plan and a set of rules, you’ll avoid chasing extended stocks, continue to plan your risk carefully, taking profits along the way and watchful for changes in sentiment that could happen at any time.

Trade Wisely,

Doug

Shaking off any and all concerns of potential economic impacts from the coronavirus buyers pushed up the SP-500 and Nasdaq setting new record highs.  How long this can continue is anyone’s guess but traders should be very careful not to become complacent over-trading a rally that is already quite extended.  Although the price action of MSFT appears, parabolic buyers didn’t hesitate to push the stock up making the company the biggest company in the world by valuation yesterday.  With a big day of Fed speak, more than 100 companies reporting and the New Hampshire caucus anything is possible.

Asian markets closed mixed but mostly higher overnight as Chinese banks scramble to support business requiring huge capital injections due to the outbreak impacts.  European markets are bullish across the board on positive earnings results.  US Futures indicate another gap up open and more new records as the rally continues to extend with no concern of future virus related impacts.

On the Calendar

On the Tuesday earnings calendar, we have a busy day with more than 100 companies reporting quarterly results.  Notable reports include AKAM, AN, DENN, DBD, D, EXAS, EXC, GT, GRPN, HAS, HILT, LPX, LYFT, MAS, MLCO, NNN, ONDK, TGNA, UAA, VIRT & WU.

Action Plan

The bulls continue to shake off coronavirus concerns and the obvious economic impacts pushing the SP-500 and Nasdaq to new record highs on Monday.  While the absolute breadth index (T2101) remains in a month over month downtrend select, large market cap companies continue to lift the indexes.  The relentless buying without regard to valuation is very reminiscent of the 1999 tech bubble though the economic particulars are very different.  A report yesterday suggested GDP may fall by as much as 50% due to the outbreak impacts on the economy in the coming months.  However, in the short-term earnings continue to inspire the bulls to buy.  Yesterday, MSFT rose to the top, becoming the biggest company by valuation in the world pushing the chart into the parabolic territory. 

Along with a big day earnings report, we have several Fed speakers, including comments from Jerome Powell at 10:00 AM Eastern.  Although we are unlikely to learn anything new for the chairman, any inclination of dovishness or hawkishness can move the market so stay focused on price action for clues.  On the campaign front, the Democrats are hoping to shake off the Iowa debacle, gain some momentum in the New Hampshire caucus today.  So far, the field remains split and there is no clear front runner as voting begins.  The results of the contest could have market impacts for traders to consider on Wednesday morning.  Futures indicate yet another gap up open to record highs.  How long this continues is anyone’s guess, but be very careful not to chase or become complacent.

Trade Wisely,

Doug