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Market Updates Trading Plan Stocks video Market Forecast Coronavirus

Opinion: You’re Not Going To Die!

I should say, you’re probably not going to die today...

Every few years or so, the CDC comes out and absolutely terrifies the American public with a new killer disease warning. Right now it’s a particular strain of Coronavirus coming out of China. Symptoms of Coronavirus are very similar to those of the common cold; runny nose, fever, cough, sore throat, often leading to pneumonia, and it’s spread through direct contact with an infected person.

As of this writing, there have been 28 reported deaths in China, with hundreds more infected. Recent reports have also started coming in saying that the disease has made its way to the United States and United Kingdom. According to the CDC, 63 patients from 22 states are currently under investigation. Initial test results have confirmed 2 positive and 11 negative patients in the U.S.

So, it’s starting to hit home. Evaluation checkpoints are in place at most major travel hubs, quarantines have started, and travel restrictions are expected to take effect as soon as the outbreak is recognized as a pandemic. 

The World Health Organization (WHO) has gone public and said it’s too early to declare Coronavirus a global health emergency. Phew! I guess we can go back to buying the S&P then…

I expect the WHO to change their statement in a timely fashion, and you can expect the market to react as more information is released. That said, you can’t keep this market down. It has a tendency to absorb every negative piece of news you can throw at it and instantly spin it into gold. Speaking of gold, on this day in 1848 gold was discovered in California’s Sacramento Valley, sparking the Great California Gold Rush. 

Sidenote: the San Francisco 49ers are in the Super Bowl next week. Just saying…

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The thing is, you can’t really count what the WHO said as good news, it’s more like no news. So what happens when the story changes? I mean, how bad can panic selling at all-time highs really get? Maybe a 3-5% pullback is in order. Don’t forget, it’s been nearly 400 days since the last 10% correction, so maybe we’re due and this is just the kind of excuse the market needs to sucker in a few more weak longs before making a run lower.

I suppose we’ll find out soon enough. It’s been a fools errand trying to call a top in this market. You can play failed top setups for a few ticks of profit, but trying to swing trade from the short side has been the kiss of death lately. 

Posted by John Doherty on January 24, 2020

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