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

In reaction to weekend uncertainty, profit-takers dominated the price action leaving behind some potentially bearish candle patterns on the DIA, SPY, and IWM.  The QQQ held up as the strongest index, while the poor under-loved IWM proved the weakest printing a lower high.  As concerns, economic impacts, and supply chain issues begin to weigh on the market; we have a very big week of earnings reports that continue to provide short-term inspiration to the bulls.  Expect the volatile price action to continues and remain flexible as anything is possible as we sort through the uncertainty.

Asian market closed mixed with China finding the inspiration to rally with the government fronting 10 billion to help virus victims with medical costs.  European markets are modestly lower across the board as the outbreak continues to expand, and the UK reports four new cases.  US futures are trying to put on a brave face but as I write this report, the open appears relatively flat.

On the Calendar

On the Monday earnings calendar, we have just over 100 companies fessing up to results today.  Notable reports include AGN, BIP, ELY, DVA, RE, FRT, JCOM, L, MELI, OMF, PSEC, QSR, STE, & VOYA.

Action Plan

Friday saw a pullback on weekend worries printing evening star patterns no the DIA, & SPY.  The QQQ holds up as the strongest index with help from some big techs like MSFT and AMZN while IWM continues to prove the weakest index leaving behind a lower high on Friday.  Over the weekend, the outbreak death toll rose to 908, with more than 40,000 confirmed cases.  Some businesses will resume work today, but many have extended closures until March 1^st raising serious supply chain concerns for may US Business.  However, the market may once again choose to ignore that as traders react to more than 500 earnings reports scheduled for this week.  Tuesday and Wednesday at 10 AM Eastern Jerome Powell speak and of course, could move markets if there is anything new gleaned from his comments.

Instead of the wild futures driven gaps we witnessed last week, the pre-market activity is taking a much more subdued approach this morning as concerns of economic impacts from the outbreak grow.  Technically speaking, there is a reason for traders to be a bit pensive with possible bearish patterns printed on the index charts at or very near price resistance highs.  What comes next is anyone’s guess!  Will we take our queues from the big week of earnings events or will the virus impacts take center stage.  One thing for sure traders should plan for more volatility, remain flexible, and guard against over-trading. 

Trade Wisely,

Doug

What a wild ride the market has delivered this week, recovering to new record highs amid a mixture of earnings results, the Presidents acquittal, and a virus outbreak that continues to expand.  After such a strong rally, we should not be surprised to see some profit-taking as we head into the uncertainty of the weekend.  Let’s hope the very big gaps left behind can hold as support if tested by the bears.  It could make for a very volatile pullback should those gaps start to fill.  If your currently holding gains, it may not be a bad idea to capture at least some of them before the weekend.

Asian markets closed mixed overnight as China’s trade data was delayed, and the outbreak expanded to more than 31,000 confirmed cases.   European are seeing only red this morning but so far, losses are rather moderate.  US Futures currently point to a gap down of nearly 100 points ahead of the Employment Situation number and a lighter day of earnings reports.  Although the bears are indicating some pressure this morning, I would not expect the bulls to give up easily.

On the Calendar

On the Friday earnings calendar, we get a nice break with just over 40 companies reporting results.  Notable reports included ABBV, AVTR, FE, HMC, & MSG.

Action Plan

After the wild week of bullishness, I was expecting to see the Friday morning futures pushing to extend higher to finish the week strong.  However, the delay in China’s trade data seemed to bring some attention back to issues surrounding the outbreak.  Death numbers rose to 636, and confirmed cases grew over 31,000.  Confirmed cases on the quartered cruise ship are now over 40 as testing continues.  I have to image news like this will continue to affect all travel-related stocks negatively.  As of right now, business is scheduled to resume in China on Feb. 10^th, but with the outbreak continuing to expand, could we see another extension by the government this weekend?

The sharp recovery rally this week set new record highs in the DIA, SPY, and QQQ, but also left behind some very big gaps which provide weak levels of price support.  If a pullback begins, that could cause some considerable volatility if price slips into the gaps.  With the uncertainty of the weekend ahead, a little selling pressure could quickly bring out profit-takers.  Plan your risk carefully into the weekend, and remember never to allow greed to prevent you from taking a profit.  Have a great weekend, everyone!

Trade Wisely,

Doug

With a massive short squeeze, the bulls managed not only managed set new records but chose to ignore the possible outbreak impacts.  With the virus now spread to more than 28,000 and the possibility China will have to extend business closures, it will be interesting to see what comes next.  The President acquitted Chinese tariff cuts, and a huge day of earnings and economic reports would suggest price volatility continues and that anything is possible.

Asian markets rally to close green across the board in reaction to the Chinese tariff cuts overnight.  European markets are also in rally mode this morning with gains across all indexes.  US Futures point to more new record highs with Dow once again set to gap up more than 100 points at the open.  Once again, be very careful chasing the open.  Plan your trading carefully.

On the Calendar

On the Thursday earnings calendar, we have our biggest day this week, with more than 210 companies reporting.  Notable reports include UBER, ATVI, MT, BIDU, BLL, BDX, BMY, CAH, DNKN, EL, EXPO, FCAU, FTNT, HBI, IQ, K, MPW, NYT, NLOK, PENN, PM, PINS, SPGI, SNY, SKX, TTWO, TPR, TMUS, TWTR, TSN, WWE, WYNN, XYL, & YUM.

Action Plan

A soaring day in the market as bulls stage a relentless push once again breaking records.  After the bell, the Senate voted to acquit the President of all charges and this distraction is now in the rearview.  During the night, China announced it would cut tariffs on hundreds of US goods by half a gesture they say is an attempt to improve the trade relations between the two countries.  Numbers on the Coronavirus continue to grow rapidly with now more than 28,000 confirmed cases and 563 deaths.  Japan reported ten more people on the quarantined cruise ship have tested positive bring the total to 20 cases.  Over the last 3-days, the market has done a good job of ignoring the potential economic impacts of the outbreak; one has to wonder how much longer that can continue. 

Tariff cuts, earnings and economic reports will provide plenty of opportunities for price volatility to continue today.  The T2122 indicator went from oversold or overbought in just 3-days of trading, indicating just how emotionally charged and volatile price action has become.  After such a strong run, it might be wise to consider taking some profits rather than chasing stocks that appear very extended or pushed up against resistance levels.  Futures this morning are once again pointing to a gap up open, and it’s very easy to feel the fear of missing out and find yourself wanting to chase.  Consider your risks carefully as the bulls continue to stretch stocks far from support levels.

Trade Wisely,

Doug

A mixed bag of earnings results and a growing outbreak now approaching 25,000 infected is no deterrent for the ravenous bulls as the QQQ leaps to new record highs yesterday and is once again gaping sharply higher this morning.  Let’s party like it’s 1999, but be careful chasing stocks already extended.  Plan your trades carefully at or near price support levels with a logical stop in place in case the music suddenly ends.  No one knows when that might be so follow your rules, avoiding those emotional mistakes that can prove very costly when we get caught up in the chase.

Asian markets were once again green across the board overnight, with China regaining another 1.25% after selling off 7% on Monday.  European markets and US Futures both turn higher after and unconfirmed Chinese TV report of a dug break-though for the corona outbreak.  Anything is possible with a big day of earnings and economic reports, so expect the wild price action to continue.

On the Calendar

On the hump day earnings calendar, we have a busy day with more than 160 companies stepping up to report.  Notable reports include ABB, AVB, BSX, ELY, CINF, COTY, ELF, ENR, FEYE, FLO, GM, GPRO, GRUB, HUM, IAC, IRBT, MRK, MET, OHI, ORLY, QCOM, RGLD, SAVE, SPOT, TWLO, YUMC, & ZNGA.

Action Plan

An early morning rally in the US Futures rally after a Chinese TV report of drug breakthrough for the coronavirus.  Even though the story is unconfirmed, this emotional market lept up nearly 300 points in early morning trading.  As of last night, there are nearly 25,000 confirmed cases and more than 490 deaths.  American and United announced overnight they are stopping flights to Hong Kong and Princess Cruise Line quarantines 3700 passengers after confirming 10 cases of the virus on board.  Disney reported is expects a 175 million impact for the closing of its parks in China, and analysts have started to adjust next quarter expectations on companies exposed to the virus outbreak.  NKE reported possible production delays due to their material supply chain from China is experiencing significant delays.

Despite the pending impacts, the US markets continue to rip higher with the QQQ setting a new record high yesterday.  If fact, it would seem that the ravenous appetite to buy already extended stock prices has increased.  Even stocks that appear to be in parabolic patterns such as TSLA continues to attract buyers with seemingly no concerns about price.  I am not saying the conditions are the same but the relentless buying is reminiscent of the tech run-up in 1999.  Though I risk sounding like a broken record, traders should guard themselves against chasing stock prices without regard to the last price support.  You don’t want to be the last person looking for a chair when the music stops.

Trade Wisely,

Doug

A GOOGL revenue miss, an outbreak continuing to expand, and a sputtering conclusion to the Iowa caucuses remarkably and somewhat confusingly inspires a bullish charge this morning.  We have a very big day of earnings and this huge gap up is likely to trigger a painful short squeeze for traders caught short.  As we seemly shake off any concerns of the outbreak economic impacts focus on the price action and the fact we are gaping right into price resistance levels.  Chasing this creates a large risk to support levels if, like yesterday virus new spoils the bullish party.

Asian markets close in the green overnight with the Shanghai composite bouncing 1.34% after yesterday’s plunge.  European markets also advance this morning, reacting to earnings and shaking off virus concerns.  As we approach the open US Futures, continue to climb ahead of a big day of earnings and economic news.  Hang on today would be a wild ride!

On the Calendar

On Tuesday earnings calendar we have a big day with 153 companies reporting quarterly results,  Notable reports include CMG, DIS, AFL, AGN, ALL, ATO, BOOT, BP, CNC, CB, CLX, COP, CMI, EMR, FISV, F, GILD, LHX, LII, MTCH, MCK, PBI, PAA, RL, RCL, SBH, STX, SPG, SIRI, SNAP & SNE.

Action Plan

Futures created a big gap and steep rally, and then virus fears once again brought in the bears after a report that a cruise ship passenger contracted the disease 6-days after departing the ship maybe infecting other passengers.  After the bell, yesterday GOOGL somewhat disappointed investors beating earnings estimates but missing on revenues falling about $45 a share.  Despite the disappointment and the virus deaths reaching 425 with nearly 20,500 infected futures are flying high this morning as markets choose to shake off and ignore previous concerns.  

As I write this report, US Futures point to a 300 point gap!  I can’t find anything in the news that justifies such a gap, but clearly the institutions what a return to bullishness.  This mornings gap could easily trigger a short squeeze rally forcing the markets higher still.  I don’t understand where the bullishness is coming from but the good news is I don’t have too.  My job is not to understand the wild emotional swings this market makes.  My responsibility is to maintain focus & discipline to my rules and my trade plan.  Unfortunately, a gap of 300 points is likely to create increased risks that may prevent me from entering trades.  I will not chase with a fear of missing out as the market gaps into price resistance. 

Trade Wisely,

Doug