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Thursday, January 30, 2020

Update 1/30 Strong volume up day

After the WHO came out and declared a global health emergency, but did not recommend any travel restrictions the bulls came into the market with considerable volume.

SPX closed slightly above the 20 SMA.  Breadth was only slightly positive, but it was -74% early in the day.  Notice the high volume. 

The futures gapped considerably lower, but rallied from the open.  Mid morning the market sold off to new lows for the day, but the bulls showed up and took the market back toward the morning highs.  After the WHO press conference the futures took off.

The market does not appear to be worried about the virus at the moment.  That may change if people start dying outside of China.  However, we can't know if that will happen or not.  If the news allows it appears to me SPX wants to test the highs again.  The bulls still need to follow through on today's strength.

I read a story about a 10 year old kid in a family that were all sick but him.  The doctors did not want to test the kid at first because he had no symptoms.  The parents finally got them to do it and he was positive.  The article said the deaths appear to be older persons or those with weak immune systems.  The fact that young people can carry the virus and possibly spread it without symptoms will make it virtually impossible to contain it.  The mortality rate of those getting sick enough to seek treatment seems to be around 2% which would compare to relatively bad flu virus.  Doctors will likely get better at treatment with experience which could make the rate drop.  There is still a lot we don't know, but it does not appear to be horrible as one might think judging by the Chinese response.  I am beginning to think the real problem in China is insufficient medical facilities rather than a really bad virus, but I could be wrong.  I can see why the market might shake it off.


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