6-07-2020 Coronavirus Update: The daily increase in active cases has ticked up as shown below. Our market timing may hinge on the development of this chart alone. The virus has NOT been defeated. If people have that impression, they need to study the statistics a bit more. Our pandemic in the US was at 107 active cases on March 4th. Active cases are now at 1,133,272. Sound like a cure? There is still far too much community spread going on, and it’s likely related to the failure of about half the public to participate in mask wearing and social distancing. The two lines shown both need to turn back down within a day or two. If they do, the recovery will continue, even if slow. If not, there could be a strong reaction in the global equity markets.
Primary Data from Worldometer.com
6-01-2020 Coronavirus Update: Note the bump up tonight in the active case stat I follow, which I predicted last night, because the data is lumpy, and the dive yesterday was a bit too extreme. Still, the trend in the COVID-19 Active Case Day Over Day Percent increase is down. In fact the 5-day moving average (mav) is both down and slightly negative tonight (-0.27%).
The death numbers are less impressive, but deaths occur on a lag to cases, so this is not discrepant. Overall, it’s a good trend, which I am hopeful will continue, although the close quarters in the protests could pose a challenge in multiple U.S. cities…
What about market timing? If this continues, the U.S. equity markets will be encouraged to continue the recent uptrend.
5-21-2020 Coronavirus Update (COVID-19): You can see the very slight incline in the Active Case Day Over Day % Increase – that indicates a slight acceleration in active case numbers. It’s an increase in the rate of increase in cases Day Over Day (the 2nd derivative).
Because testing facilities are not being fully used per reports, this slight acceleration is not likely due simply to increased testing. We’ll have to continue to closely monitor this incline. It could represent the edge of failure with another surge of cases and deaths on the way. Notice that the 5 day moving average is also on an incline after being on a decline previously. This may be the first sign that “Back to Work” is taking a toll, but we’ll look for corroboration in a rise in the 2nd chart below as well.
If the active case number is truly going up, and we are not just identifying patients without symptoms, the Death Percentage increase Day Over Day should increase as opposed to continue to flatten at 1.35% (last check today). That line for deaths should head to zero (the active case % D/D increase can turn negative, but total cases and deaths obviously can only stay constant as the theoretical end point of the pandemic).
Conclusion on Market Timing Impact: Recognize, as a published paper today did, that the small number of cases that started the pandemic leading to nearly 100,000 deaths just in the U.S., can start all over again if we throw social distancing and mask wearing to the wind. We just need the same small number of positives to show up, and if their contacts are not traced immediately, we can easily be back to square one.
The fewer people who wear masks, the higher the Coronavirus transmission rate is, which is called the R0, pronounced “R naught.” Without masks the R0 is around 2.5ish for this virus which means it spreads exponentially (2.5 X 2.5 X 2.5 X 2.5 etc.), again without the barriers we put up in front of it by staying at home and wearing masks, washing our hands. Each of those reduces the transmission rate/R0.
The virus has not changed. It’s still in the population, just at levels that won’t currently overwhelm the healthcare system. We need to keep it that way, or the equity markets will respond negatively.
Please read my latest messages on social media to keep up with my latest view of the market. Lately an important market timing level has been “anointed” as the market is deciding whether to discount any more recovery or not…
It is very difficult to see how the market can simply retop at the prior all time high (ATH) when there is such resistance to normal consumer behavior locked into the current circumstances. It seems very naive to think that would be the case, which is why some level of retracement is likely toward the March 23rd low (but not necessarily all the way back to it)…
Keep up-to-date and read my comments on the current setup during the week at Twitter and StockTwits (links below) where a combined 34,477 investors are following the markets with me…
Join the Conversation in the StockTwits “MarketTiming” Room (I’ll publish comments in the room periodically)
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