The U.S. stock indexes have been hammered this week. On Monday prices gapped sharply lower on the daily bar charts and then on Tuesday saw strong follow-through selling pressure–a solid signal that near-term market tops are in place. Stay tuned to my daily market reports, which will provide you with the early clues on when the blood-letting in the U.S. stock indexes will stop, so keep reading them!–Jim
Daily Morning Report
Coronavirus-generated turmoil in marketplace continues at mid-week
Wednesday, February 26–Jim Wyckoff’s Morning Markets Report
Global stock markets are lower at mid-week as the coronavirus outbreak and its expected human toll and negative world economic fallout continue to intensify. There is no consensus on how or when this situation will wind up playing out. That suggests turmoil in the markets will continue in varying degrees until some kind of end-game for the matter is expected by the majority of market watchers. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. The DJIA on Monday and Tuesday saw its largest two-day drop in history, points-wise. The S&P 500 futures hit a three-month low overnight.
The U.S. Center for Disease Control officials at a press conference on Tuesday afternoon said of the outbreak: “This might be bad.” The CDC said the Covid-10 illness is going to spread in the U.S. The outbreak continues to spread in Asia and Europe.
In a sign of the keen trader and investor anxiety in the global marketplace at present, the yield on the benchmark U.S. Treasury 10-year note on Tuesday fell to a record low close of 1.328%. On Wednesday the yield traded as low as 1.312%. Gold is near steady Wednesday after falling sharply Tuesday. The big drop in gold prices Tuesday could be tied to notions of less consumer demand for the metal as global economic growth is dinged by the coronavirus outbreak. China, where the illness has hit hardest, is a leading consumer of gold.
The key outside markets today see Nymex crude oil prices lower, at a nearly 14-month low, and trading around $49.50 a barrel. Brent crude is also trading near a 14-month low. Meantime, the U.S. dollar index is higher today.
Financial and currency markets this week are pricing in expected future easing of monetary policies by the major central banks of the world, as traders reckon the coronavirus, or covid-19, illness will prompt the central banks to stimulate their economies to help ward off the negative economic impacts of the outbreak.
U.S. economic data due for release Wednesday includes the weekly MBA mortgage applications survey, new residential sales and the weekly DOE liquid energy stocks report.
–Jim
Global markets stabilize Tuesday…for the moment
Tuesday, February 25–Jim Wyckoff’s Morning Markets Report
Global stock markets have stabilized and are trading mixed Tuesday, following Monday’s strong selling pressure that wiped out all of the U.S. stock market’s gains for 2020, including seeing the Dow Jones Industrial Average lose over 1,000 points. U.S. stock indexes are pointed toward slightly higher openings when the New York day session begins. The key questions on traders’ and investors’ minds are: Have the markets now fully factored in the coronavirus impact on the global economy? Or, “will the next shoe drop” soon?
Here is the latest on the coronavirus outbreak (covid-19). China has over 80,000 confirmed cases, with 508 new cases Tuesday and 71 new deaths to push the total above 2,700. Reports say China may postpone its annual National People’s Congress in March. More than 1,200 cases have been confirmed in 30 countries outside of China. South Kore has 84 new cases and nine deaths. A crew member of Korean Air has tested positive for coronavirus. Northern Italy sees 12 towns quarantined amid 229 cases confirmed and seven deaths. Japan has 160 coronavirus cases. Still, the World Health Organization says it is too early to call the outbreak a pandemic, although other health experts are calling it such. United Airlines says U.S. citizens traveling to China are now near zero.
Financial and currency markets are starting to price in expected future easing of monetary policies by the major central banks of the world, due to the covid-19 outbreak. Fed funds futures markets show an 86% chance the Federal Reserve will lower U.S. interest rates by July. The 10-year U.S. Treasury Note yield is nearing a historic low and is currently fetching around 1.35%.
The key outside markets today see crude oil prices lower and trading around $51.00 a barrel. Meantime, the U.S. dollar index is slightly lower but not too far below last week’s nearly three-year high.
U.S. economic data due for release Tuesday includes the weekly Johnson Redbook and Goldman Sachs retail sales reports, the monthly house price index, the S&P-Case-Shiller home price index, the Richmond Fed business survey, and the consumer confidence index.
–Jim
Another bearish stock index clue–can the bulls overcome this one, too?
The U.S. stock indexes took another bearish technical hit Monday when prices gapped sharply lower on the daily bar chart–a warning signal that a near-term market top is in place. Can the bulls overcome yet another near-term bearish clue of a top? They have done so in the recent past. However, this bearish clue is the strongest one yet, to signal a market peak. Price action the rest of this week will likely go a long way in determining of the U.S. stock market has put in a near-term top. My daily market reports will provide you with the near-term clues on price direction and trend changes, so keep reading them!–Jim
Coronavirus outbreak spreading, markets worldwide rocked amid the keen uncertainty and fear
Monday, February 24–Jim Wyckoff’s Morning Markets Report
Markets worldwide are getting rocked by a marked increase over the weekend in trader and investor fears amid the still-growing coronavirus outbreak. Gold is up around $40 an ounce and at a seven-year high, U.S. Treasuries are rallying sharply, the U.S. dollar index is up, crude oil prices are sharply down and much of the rest of the raw commodity sector is feeling selling pressure. Asian and European shares were down overnight. U.S. stock indexes are pointed sharply lower openings when the New York day session begins, with the DJIA down over 700 points.
While the human toll from the coronavirus (covid-19) is growing, the likely economic toll also is expanding. What is gripping markets is the keen uncertainty of how this situation will eventually play out. There is no consensus at all regarding the outcome.
China recorded the total number of afflicted at over 77,000 and over 2,350 dead. The illness is also spreading in South Korea. Northern Italy has some towns quarantined after the covid-19 illness was discovered spreading in that region, including three deaths.
Manufacturing indexes from the major world economies are showing the negative effects of the covid-19 outbreak. U.S. companies are also mentioning the illness as impacting their bottom lines when earnings reports are released. The global marketplace has quickly realized early this year the keen importance of China’s economy in the world supply chain, which has been significantly disrupted.
The key outside markets today see crude oil prices sharply lower and trading around $51.40 a barrel. Meantime, the U.S. dollar index is higher and not far below last week’s nearly three-year high.
U.S. economic data due for release Monday includes the Chicago Fed national activity index and the Texas manufacturing outlook survey.
–Jim
Risk-averse marketplace to end the trading week Friday
Friday, February 21–Jim Wyckoff’s Morning Markets Report
Asian and European shares were mostly down overnight. U.S. stock indexes are pointed toward weaker openings when the New York day session begins. Risk-off trading attitudes are keen as the trading week winds down, as the coronavirus continues to spread in Asia, and its impact on the global economy is perceived to be getting much more serious.
Reports overnight said China’s auto sales fell over 90% in February as coronavirus restrictions prevented buyers from visiting car dealerships. Over 21 million autos were sold in China in 2019, making China the world’s largest auto market. The Hubei province is still in lock-down and officials there have pushed back the date for businesses to reopen to 10 March. That date could be further delayed if covid-19 is not contained by then.
China recorded over 800 new cases Thursday (up from around 400 Wednesday), with the total number of afflicted now at over 75,000 and over 2,200 dead. South Korea has reported over 200 confirmed covid-19 cases. The capital has banned all rallies in major downtown areas.
From a marketplace perspective the covid-10, or coronavirus, situation is still very fluid regarding the economic impact on major world economies. Traders and investors are vacillating daily on whether the outbreak’s rate of spread is accelerating or declining. This uncertainty will continue to support buying interest in safe-haven assets like gold, U.S. Treasuries and the U.S. dollar, and the movement of money out of riskier assets like stocks. Gold prices hit another seven-year high of around $1,640 overnight.
Manufacturing indexes from the major world economies are starting to show the negative effects of the covid-19 outbreak. U.S. companies are also mentioning the illness as impacting their bottom lines when earnings reports are released.
The key outside markets today see crude oil prices lower and trading around $52.75 a barrel. Meantime, the U.S. dollar index is weaker on a corrective pullback after hitting a multi-month high Thursday.
U.S. economic data due for release Friday includes the US flash manufacturing PMI, the services PMI, and existing home sales.
–Jim