Market Commentary & Analysis February 22, 2020

The stock market sold off by end the shortened trading week amid a broad defensive nature, as traders and investors remained unmoved by the coronavirus outbreak. 

The small-cap Russell 2000 index lost -0.5%, the S&P 500 index give up -1.3%, the DJI Average index lost -1.4%, and the Nasdaq Composite index dropped -1.6% - The S&P 500 and Nasdaq initiated new intraday and closing records this week.

S&P 500 Technical Analysis and Outlook: The completed Outer Index Rally $3,382 has been retested and penetrated with TARC $3,386 validation. As a result, the index dropped to a Mean Sup $3,329. We are expecting steady to lower movement of about $3.320 level. The stage 1 rally to follow with 70-80% probability move to the cyclical resistance of $3,386. 

Gold Market

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Market action

The market action week began with Apple, the world's biggest technology company by market capitalization, announced an earnings warning for the first quarter due to the outbreak of the coronavirus in China. 

The company's shares recovered initial losses as traders and investors viewed the circumstances as China-specific and temporary. However, it was hard to neglect the widening extent of the coronavirus outbreak and the defensive attitude in the markets. 

Mega-cap stocks and cyclical S&P 500 sectors were the leading retreaters. The industrials posting -1.2%, financials dropping -1.3%, and information technology were taken on the chin with -2.5% loss. The defensive-oriented real-estate sector was unchanged and was the lonesome group to dodge a weekly loss. 

The action in the United States Treasuries, Gold gaining +4.3%, and the Chicago Board Options Exchange (CBOE) Volatility Index reaching +24.9% were noticeable advancements during the week and hardly moved even when the market posted new highs. 

The momentum stocks like Virgin Galactic and Tesla Inc. continued their parabolic runs. The role of the defensiveness could be attributed to the highly excessive valuations in the markets, contrasting with growth risks as a result of the coronavirus.

If traders and investors continue to be constructive on the stocks, one could aim to this week's optimistic economic numbers. Building permits rose to a near thirteen-year high last month, weekly jobless claims settled at low levels, while the Philadelphia Fed Index mounted to 36.7 this month springing from 17.0 posting in January. However, the data was not enough to halt this week's profit-taking.

The Two-year yield sank seven basis points to close at 1.35%, while the Ten-year yield decreased 11 basis points to finish at 1.47%. The United States Dollar Index (DXY) closed 0.2% higher to close at 99.34 following initiating a three-year high price at 99.61 during the four day week. The West Texas Intermediate (WTI) crude oil rose 2.8% to close $53.20/bbl.

Gold market

The Gold market is rising all around the world as it has extended its rally this week, blowing off its six-year high $1,611 and TSS Inner Gold Rally at $1,635. 

With the Gold advancing higher, despite the adverse effects from central banksters, we might finally witness their surrender and throwing in the towel. There are only four countries (the United States, Switzerland, China, and Japan) in the world where Gold is not trading in their respective currencies at its highest price in history.

With the Gold moving higher, notwithstanding the cited headwinds from central banksters, it is difficult to see at what stage we will get London collapse Gold Pool II as it happened in 1968, caused by the shortages of both Gold and Silver.

Eurozone surrendered in 2019. Switzerland and Japan will surrender soon as well, and that will leave only the USA and China to come on board. The yellow metal must increase roughly another 20% to set a new all-time high in U.S. Dollar terms. 

Yuan currency is linked to the U.S. Dollar, and that will force China to succumb at the same time as the USA. This price action will cause the Gold to reach a new all-time high, and once the yellow metal establishes trading at all-time highs globally, it will get considerable attention from investors and traders. Got Gold!

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