Corona Panic.
By Bennett Tindle January 30th, 2020
Stocks on Friday were met with a significant decline following the CoronaVirus outbreak and news, leaving many investors uncertain and running for the exits. A close analysis of the tape would reveal that the decline was a direct result of the news and investor fear, while many growth and momentum names were still holdingup relatively well. Fast forward into Monday the 27th and the gap lower in the market resulted in the weakness spreading into your more traditional ‘bull market’ stocks and sectors. As a team we still felt the overall uptrend remained in-tact, and had no interest in taking short exposure prior to the heart of earnings season (150 S&P 500 Companies report in the week of 1-27-2020), and felt the move lower was an over-reaction from the investing public. Our thesis has since proven to be true aswe see the S&P 500 climb back over 1.5%+ from the opening low on Monday the 27th. We remain bullish and have been capitalizing on any pullbacks by adding exposure in our portfolio. Moving forward we see two distinct possibilities from a technical standpoint, both outlined in my video update below.
Really detailed analysis on SPX Bennett great job !
I presume once this current correction completes and price moves back to new ATH’s, your “primary” will be shelved. Meanwhile, as expected this correction moved down again to either complete itself (probably not but possible), or complete a 3 wave “a”. The overall action as of 2/3 mid-day doesn’t look overly “triangle-ish”, but it’s still possible. It looks a bit more like a complex WXY. But corrections don’t really reveal their structure often until they are just about complete. It’s worth noting that the Sept sell off (minor Y of intermediate 2 per your count) is the “next up” matching correction, and it was 10 trading days long. This one as of the low of Friday 1/31 was 7 trading days long. So yea, probably not over yet, but it does NOT have to extend out in time as long as what you have modeled as the intermediate (blue) 2. It may very well “match” only the minor Y leg of that intermediate 2, implying that perhaps your extended intermediate 2 model isn’t accurate (my primary count has it as a 1-2-1-2 sequence instead). We’ll see!!! Excellent overall work, thank you.