Will the Market Be Immune to the Wuhan Virus?

by Options Sensei |

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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