It has been three weeks since China officially declared the Coronavirus outbreak. In past week new cases have declined. Concern is expressed in news media on its effect on global economy. Markets have taken this in stride with testing of 50 DMA support two weeks ago and launching new highs past week. In short, market seems to discount this as a short-term manageable issue and is focusing on economy and strong earnings reports. Trade optimism and Earnings results continue to lift stocks up.
Sentiment is getting overdone short-term and we expect volatility to rise but intermediate term indicators are positive.
Recap of last week:
Economic Reports:
| Economy Indicator | Released Date | Period | Prior | Prior Revised | Consensus | Actual |
| Ameritrade Investor Movement Index | 2/10/2020 | January 2020 | 5.68 | 5.55 | ||
| NFIB Small Business Optimism Index | 2/10/2020 | January 2020 | 102.7 | 103.2 | 104.3 | |
| Store Sales Y/Y Change | 2/10/2020 | WK 2/8, 2020 | 5.7 % | 4.8 % | ||
| JOLTS Jobs Openings | 2/10/2020 | December 2019 | 6.800 M | 6.787 M | 6.775 M | 6.423M |
| MBA Mortgage Applications W/W Change | 2/11/2020 | WK 2/7, 2020 | 5 % | 1.1 % | ||
| Atlanta Fed Business Infl. Expectations % Yr/Yr | 2/11/2020 | January 2020 | 1.9 % | 1.7% | ||
| Treasury Budget level | 2/11/2020 | January 2020 | -$13.3 B | $11.5 B | -$32.6 B | |
| CPI M/M Change | 2/12/2020 | January 2020 | 0.2% | 0.2% | 0.1% | |
| CPI Y/Y Change | 2/12/2020 | January 2020 | 2.3% | 2.4% | 2.5% | |
| Jobless New Claims | 2/13/2020 | WK 2/8, 2020 | 202 K | 203 K | 211 K | 205 K |
| FED Balance Sheet | 2/13/2020 | WK 2/12, 2019 | $4.167 T | $4.183 T | ||
| Money Supply M2 Weekly Change | 2/13/2020 | WK 2/3, 2019 | $34.8 B | $34.2 B | -$4.9 B | |
| Retail Sales M/M change | 2/14/2020 | January 2020 | 0.3% | 0.2% | 0.3% | 0.3% |
| Retail Sales less autos M/M change | 2/14/2020 | January 2020 | 0.7% | 0.6% | 0.3% | 0.3% |
| Import Prices M/M Change | 2/14/2020 | January 2020 | 0.3% | -0.2 % | 0.0 % | |
| Export Prices M/M Change | 2/14/2020 | January 2020 | -0.2% | 0.0 % | 0.7 % | |
| Import Prices Y/Y Change | 2/14/2020 | January 2020 | 0.5 % | 0.2 % | 0.3 % | |
| Export Prices Y/Y Change | 2/14/2020 | January 2020 | -0.7 % | -0.2 % | 0.5 % | |
| Industrial Production M/M Change | 2/14/2020 | January 2020 | -.3 % | -0.4 % | -0.3 % | -0.3% |
| Manufacturing M/M Change | 2/14/2020 | January 2020 | 0.2 % | 0.1 % | -0.2 % | -0.1 % |
| Capacity Utilization Rate Level | 2/14/2020 | January 2020 | 77.0 % | 77.1 % | 76.8 % | 76.8 % |
| Business Inventories M/M Change | 2/14/2020 | December 2019 | -0.2 % | 0.1% | 0.1 % | |
| Consumer Sentiment | 2/14/2020 | Feb(p) 2020 | 99.8 | 99.7 | 100.9 | |
| Baker-Hughes Rig Count | 2/14/2020 | WK 2/14, 2020 | 1047 | 1045 |
This week’s major events:
| Monday | President’s Day Holiday | |
| Tuesday | Empire State Mfg. Survey; Housing Market Index; International Capital | |
| Wednesday | MBA Mortgage Applications; Housing Starts; PPS-FD; Redbook; E-commerce Retail Sales; FOMC Minutes | |
| Thursday | Jobless Claims; Philadelphia Fed Business Outlook; Leading Indicators; Balance Sheet; Money Supply | |
| Friday | PMI; Existing Home sales; Baker-Hughes Rig count |
Economy:
Economy reports are positive. Job openings and new Jobless claims are in line with consensus. Consumer and small business optimism indexes are up. All this bodes well for markets.
Sector performance
Stock to Watch: None for now.
Many stocks are extended from ideal buy points.
Strongest groups are Auto Manufacturers, Semiconductor-equipment, Medical-Biomed/Biotech, Leisure-Gaming, Semiconductor-Fabless.
Weakest groups are Retail-Mall, Energy-Coal, Computer Networking, Food-Beverages, Leisure Toys-games
Watch List: Our strong RS/Growth screen is showing following candidates.
PCTY, RNG, EPAM, FIVN, LULU, NOC, IPHI, COST, CPRT, ESNT, KEYS, VRTX, RDN, PODD, CMG, FTNT, FISV, GOOGL, MSFT, NMIH, NTES, INCY, BABA, DOCU, ARES, FB, STNE, NOW, SE, PAYC, SHOP, CROX, AUDC, UFPI, JBL, MHO, IBP, SEDG, SPLK
Summary:
Coronavirus outbreak is likely to be short term concern. Markets continue to make new highs. Expect volatility to go up short-term. Be prepared to protect your gains from last three months. Intermediate trend continues to be up.