Commentary: Paul Ebeling on Wall Street

Commentary: Paul Ebeling on Wall Street

$DIA $SPY $QQQ $RUTX $VXX

Technical Analysis at the weekended 21 February 

NAS Comp: It sold to the 10-Day EMA and then rebounded and filled the gap from Wednesday. It is still using the 10-day EMA as it trends higher.

S&P 500: It tapped at the 20-Day EMA on the low, rebounded to a modest loss and showed a Doji with a tail. Then, buyers stepped in and bought it.

Sunday night

DJIA, S&P 500 and NAS Comp futures dove on fears that a global coronavirus pandemic is possible. The stock market rally took a step back last week on coronavirus fears, with Apple (AAPL) warning that it will miss revenue targets due to the Covid-19 virus. Coronavirus cases are picking up outside of China, notably in SKorea and Italy.

Dow Jones and S&P 500 futures fell 1.3% Vs fair value. NAS Comp futures plunged 1.8%. Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.

Crude Oil prices are tumbling while gold prices continue to rise.

In addition to coronavirus concerns, Dow futures may be reacting to socialist Bernie Sanders winning the Nevada caucuses, cementing his Democratic frontrunner status. The socialist Sanders favors big tax hikes and sweeping changes. I believe that his nomination makes President Trump’s re-election more likely.

Coronavirus News

As new China coronavirus cases decline, the government is pushing factories to reopen. Beijing aims to reignite the economy but risks spreading the Covid-19 virus further.

SKorea virus cases have jumped to 763, with 7 deaths. The government raised its infectious-disease alert to its highest level.

Italy imposed lockdowns on several towns in 2 northern regions, as coronavirus cases have hit 155 just a few days after the suspected case, 2 people in Italy have died of the coronavirus, the 1st non-tourists to fall to the Covid-19 virus in Europe.

Iran has 43 coronavirus cases and 8ht deaths.

There at least 35 coronavirus cases in the US.

Total coronavirus cases are nearing 80,000, with all about 2,000 within mainland China. Deaths have topped 2,450, with over 2,300 in China.

Coronavirus news could swing Dow futures overnight.

This stock market rally

The current stock market rally stepped back last week.

The DJIA fell 1.4%, the S&P 500 index 1.25% and the NAS Comp 1.6%.

Most or all of those losses came Friday, with Apple stock weighing on the DJIA, S&P 500 and NAS Comp. That was the 3rd time over the last month that the stock market sold off on Friday. Investors have been wary of being long into a weekend of coronavirus news.

This is healthy action for the stock market rally. The major indexes were becoming stretched from their MAs (moving averages).

A stock market pause to refresh would let give a chance for leaders such as Apple stock and TransDigm stock to form new bases or Bullish pullbacks.

However, investors may be ready for a more serious stock market rally retreat. The coronavirus risks becoming a much longer and deeper threat to the global economy.

Goldman Sachs says that the coronavirus impact on supply chains will be “non-linear” if current trends continue. In other words, the impact will suddenly get worse in Q-2 as inventories run out.

Continue to review your stocks and overall portfolio exposure, remember it is your money and so, your responsibility.

Have a terrific week

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.