Will the Market Be Immune to the Wuhan Virus?

Will the Market Be Immune to the Wuhan Virus?

Posted On January 29, 2020 2:39 pm

Coming into 2020, the outlook was clear sailing as the two biggest bugaboos: interest rates, and trade tariffs both had been removed and the economy was on solid footing.

Then came the Iran/Iraq conflagration.  The market dipped a whopping 1% before recovering the next day and making new highs within the week.

The China Coronavirus followed and the market dropped a whopping 1.2% before reclaiming those losses within the next two days.

Neither of these issues are resolved, which begs the question: is the stock market immune from bad news?  And how do we play this increasingly precarious rise while these uncertainties loom in the background?

Before January 20th, the date virus went viral, healthy inflows had boosted global equity markets, ironically the Shanghai Composite most of all.

The CSI Index gain nearly 8% since a November low, making it one of the best performers among global benchmarks in that time. Chinese investors lifted their leverage to about 1.04 trillion yuan to chase the rally.

CSI Leverage

It’s almost impossible to model how the virus will play out but people are certainly trying.

Basic models offer a bleak scenario of… Continue reading at StockNews.com

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About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.

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