Borsa MAX Borsa

Stocks: It occurred to me that the PPT may have manufactured a false breakout to allow the banks to exit the market. First off it seems to me that the corona virus is much worse than governments are leading everyone to believe. If this was just a flu virus, not much different than any other flu, then why has China shut down? I noted last weekend that the long incubation period increases the risk of spreading the virus. Last week there were a little over 9000 confirmed cases (and probably considerably more unconfirmed. This weekend that number has tripled.

If we triple the cases again next week and again after that, and then add in the fear factor if people become afraid to leave their house we’re potentially looking at something that could damage the global economy. With China already shut down I have to think it’s already damaging the economy. I don’t see how the second largest economy on the planet can grind to a halt and it not impact the rest of the world. So I’ll noted again that we may have seen the PPT manufacture a false breakout to allow the banks and smart money to sell their shares to retail traders and hedge funds that now think the Fed is all powerful and there is no risk to long positions. We’ve seen this kind of pattern before at major tops and the inverse at bottoms. A breakout or breakdown is created and the smart money uses the breakout to dump their shares to bag holders at the top, or vice verse, buy from panicked sellers at bottoms.

The fact that the breakout immediately failed on Friday might be a warning sign. If you are long stocks I would immediately put a breakeven stop on your position Monday morning. And if the market starts to drop much further I’d even suggest just getting out so you don’t risk a gap down open that might run through your stop in the premarket or overnight session. The fact that the McClellan oscillator hasn’t been able to hold above 0 is another warning bell.

Gold: This may be why gold won’t drop no matter how much the dollar rallies, or how much the banking cartel beats on the miners and silver. If this does turn into a major economic downturn, and if stocks do finally produce a true ICL correction, central banks all over the world will ramp up QE even more, and I don’t see how that can’t benefit gold in the end. I still recommend the sidelines for now until we see the mining shares break out of the handle.

Oil: I also think traders need to keep a tight leash on any energy trades. Oil hasn’t really bounced convincingly yet and is still flirting with breaking down from the consolidation box. If stocks are about to left translate the current cycle then we would be looking at 6-8 weeks of lower prices and that would imply oil may still have a considerable distance to drop still before a final bottom. I’ll point out again that if oil breaks down and retests the $40 support zone we could see a double bottom 3 YCL in the CRB. Multiple tests of a support zone usually break eventually. This is the 4th test of the 170 support. That’s not a particularly bullish development.

The only thing I like right now is gold, but I still need to see the miners break loose from the attacks holding them down before I’m ready to give the all clear.

https://asia.nikkei.com/Spotlight/Coronavirus-outbreak/China-blocks-restart-of-Foxconn-plants-due-to-coronavirus-sources