Happy Valentine’s Day!
If you looked at the closing prices only yesterday, it looked like a nothing day, but it wasn’t. The Chinese government reported a sharp increase in the cases of Coronavirus and deaths and the markets entered a sharp risk off mode in the early going. As of last night’s report from China, there have been 65,000 reported cases and 1486 deaths but the markets continue to look through the health tragedy and focus on the potential economic rebound and monetary stimulus. Traders used the early weakness as an opportunity to buy and the day ended basically flat with the more defensive sectors showing slight outperformance on the day (Figures 1-2). I would love to say something interesting about the day, but there really isn’t too much other than if there is a negative tick buyers come in. Sentiment is back to being optimistic as evidenced by our II Newsletter writer and AAII posts, and the markets have seen a sharp rebound in the mega-cap stocks and market cap indices from the Coronavirus low.
We don’t see a need to take any new action ahead of the long weekend. Our indicators remain neutral, the markets are very choppy, the Coronavirus continues to keep everyone on edge, and I am about to go on vacation. Mike Welch will be back from his vacation and will be providing the content thru next Friday, so absent a major market development – I plan on truly taking some time away from the markets, staring at some fish, and getting a sunburn (Irish tan).
Past performance is not a guarantee of future results. Index returns are unmanaged and do not reflect the deduction of any fees or expenses. All data points are sourced from Bloomberg as of 2/14/20 unless noted otherwise.
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