While it is important to take the coronavirus ordeal seriously, and it could potentially get worse, this is a classic extrapolation error that many fail to comprehend. To be clear, I am not saying the market will not go lower. Frankly, I hope it does as I can get clients in at lower prices. The death rate may increase early on though despite the headline-news spin, the daily death rate has declined significantly since 1.24.2020. So, despite the death toll increasing, as it naturally will, the daily effected leading to deaths has already declined since 1.24.2020. For perspective the flu alone has led to 10,000 deaths and 180,000 hospitalized during the 2019-2020 flu season. Thus far, the coronavirus has taken 304 lives and infected at least 14,380 in China. For clarity, I am not saying this virus won’t worsen. We will watch pricing day-by-day, but historically these viruses cause a scare and can lead to opportunity. The flu vs. coronavirus death comparison might help provide a more balanced perspective.
On the earnings front, it is another big week with Alphabet (Google) reporting after the close. As stated previously stated, when we see low fear levels, low amounts of cash on the sidelines, high levels of bullishness, and RSI levels above 70, it doesn’t take a big headline to see a decent move lower. This, however, does not mean the economy is doomed. We will see how the market responds to the below support and likely begin buying in the next three or so weeks. Don’t expect an immediate reversal higher. We might need some time to digest some of the gains over the past few months. We will be watching $SPX $3223, $3216, $3211, $3150, and $3097.
We will keep it simple and see how the market responds at these levels. Clients, regardless of whether you’re retired or young you should be hoping it goes lower so I can add at lower prices. Continue to add when you can! If you’re adding monthly, fantastic! Overnight futures in the U.S. Market started strongly higher, but the day is far from over.
DISCLOSURE STATEMENT
This post is for informational use only. The views expressed are those of the author, Jonathan M. Gurney. This material is not intended to be relied upon as a forecast, research, or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.
Opinions and statements of financial market trends that are based on current market conditions constitute judgment of the author and are subject to change without notice. Statements that reflect projections or expectations of future financial or economic performance of the markets may be considered forward-looking statements. Actual results may differ significantly. Any forecasts contained in this material are based on various estimates and assumptions, and there can be no assurance that such estimates or assumptions will prove accurate.
Investing involves risk, including possible loss of principal. Past performance is no guarantee of future results. All information referenced in preparation of this material has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed.