Stock market investors should be concerned as President Trump contemplates punishing China for the spread of the coronavirus.
In these times, interpreting information is difficult.
That’s why a great tool is segmented money flows, which are like an X-ray.
First and foremost, I am politically agnostic. My sole job is to help investors. Irrespective of your like or dislike for Trump, you have to give him credit for openly saying what many are only thinking.
Could China have stopped the coronavirus? Was China honest about the coronavirus?
Since technology stocks have been the market leaders during the rally, it makes sense for investors to direct an X-ray at them.
Let’s explore with the help of two charts.
Two charts
Please click here for an annotated chart of the Dow Jones Industrial Average ETF DIA which tracks the Dow Jones Industrial Average DJIA.
Please click here for a chart showing segmented money flows in 11 popular tech stocks.
Note the following:
• The daily gyrations of the stock market create confusion. However, the advantage of the first chart is that it provides clarity. So far, as the first chart shows, it is very simple: The stock market hit the upper band of the “mother of support zones” and has now rallied to the bottom band of the resistance zone.
• Overnight, the Chinese yuan fell 0.7% against the dollar in offshore trading. For a currency, this is a big move.
• If the yuan continues to fall against the dollar, it will give China a big advantage in exports to the United States. This will increase the trade deficit with China at a time when the U.S. economy is already suffering from the coronavirus. This newly developing situation with China can have a major impact on the stock market, even though most investors and the mainstream media have not yet put two and two together. For stock market investors, there is an advantage to looking ahead. For example, on Jan. 22, The Arora Report warned of a potential drop in the stock market due to coronavirus.
• There has been talk of the U.S. canceling the massive debt it owes China. However, this is unlikely because the U.S. wants to maintain the sacrosanct full faith and credit of U.S. debt obligations.
• Trump says he has alternate ways to punish China, such as imposing tariffs.
• The stock market does not like the idea of tariffs.
• The relations between the two largest economies of the world are deteriorating at a time when the stock market is at the lower band of the resistance zone, as shown on the chart. This is a new negative….Read more at MarketWatch.
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