ETF Tracker StatSheet          

You can view the latest version here.

SLIDING INTO THE WEEKEND

[Chart courtesy of MarketWatch.com]

1. Moving the markets

More downside momentum emerged this morning, as the coronavirus fallout continues with traders finally realizing that consumer and producer sentiment has been crippled, and that even the almighty the Fed can’t just simply reboot things by printing a few trillion dollars.

Virus cases are rebounding in China and soaring in South Korea, as the flow of assets into safe havens, like gold and bonds, pulled equities off their lofty levels. Despite this being the worst down week in four, the pullback has been modest, so far.

But, as manufacturing data from around the world comes in, worries about slower economic growth, or in some cases no growth, may continue to weigh on equity markets. Hence the flight into gold and bonds, with the 30-year bond yield now scoring an all-time record low of 1.89%. Sounds like something is amiss when considering that at the same time, equities are less than 1% off record highs.

It’s clear that a supply chain disruption is a sure thing and will affect the U.S. as well, with the first indication being the PMI manufacturing index, which has collapsed into contraction.

Still, the damage for the week was relatively minor with the S&P 500 and Nasdaq surrendering -1.3% and -1.7% respectively.

So far, the major trends remain intact, and none of our trailing sell stops are close to being triggered. However, what happens if the powers to be will not reopen the liquidity spigot, as Bloomberg demonstrates in this chart?

ETF Tracker StatSheet          

You can view the latest version here.

STUMBLING INTO THE WEEKEND

[Chart courtesy of MarketWatch.com]

1. Moving the markets

Despite predominantly trading sideways over the past 2 days, the major indexes managed to eke out a gain for the week with the S&P 500 adding +1.6%.

Uncertainty about the coronavirus, especially the reporting accuracy, left many wondering what the true status might be, after China changed the government’s counting method.  

Rabobank summed it up like this:

Not so pleasing is that there is genuine confusion on how many people are being tested; how they are being tested; how they are being classified; and how many people are actually dead. This kind of confusion is something markets have learned to live with over a little matter like Chinese GDP; it’s not so easy when it comes to something you live or die with, like a virus.

Surprisingly, so far, the markets have taken this uncertainty with a grain of salt without a substantial pullback, while the three benchmarks touched all-time highs earlier in the week.

From the economic calendar, we learned that retail sales rose 0.3% last month, import prices climbed 0.2% and industrial production headed south again by declining the fourth time in five months. Neither of these numbers had any measurable market effect.

In the end, the indexes closed the week with a last hour pump assuring a green close for at least the S&P 500 and the Nasdaq, both of which closed at all-time new highs. Of course, we have learned not to look at underlying fundamentals, such as this chart by Bloomberg shows, which paints a different picture in terms of what market direction should be.

We continue to follow the major trends which, despite the ever-present coronavirus scare, continue to plow deeper into bullish territory.