Investors behave in a disturbing manner similar to January 2018: a massive sale is brewing, warns the strategist

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Investors face a new concern on their return from a long weekend: the potential for China’s coronavirus to spread massively during a great upcoming national holiday.

“The concern is that this is another SARS, an outbreak that saw thousands infected and caused hundreds of deaths. It also led to billions of dollars in losses and reached Chinese GDP growth by up to 1 percentage point, ”said Neil Wilson, chief market analyst at the Markets.com trading platform.

A repetition of that would mean that the most recent and less optimistic forecasts of the International Monetary Fund will not remain firm and a strong contraction of many major indicators of the global economy, he told clients. While it is likely to be too early to panic, a pandemic scare may be an excuse for some investors to take advantage of a bullish start of the year: the S&P 500 achieved its sixth 2020 record close on Friday.

That brings us to our call of the day, from the head of capital strategy at Saxo Bank, Peter Garnry, who is issuing a short-term warning about a sale of shares, especially for technology names, which have led to 2019 earnings.

“The acceleration we have seen seems quite similar to what we saw in January 2018,” Garnry told MarketWatch in an interview. During that month, the S&P rose 5.6%, then fell 3.9% and 2.7% in February and March 2018, respectively.

Imitating similar movements in the period prior to that mass sale, he notices “a brief epic squeeze” in the actions of the electric car manufacturer Tesla

TSLA, + 4.98%,

for example. That refers to a rebound in stocks because bearish investors, who sold borrowed shares while betting on a fall, have to buy them again at higher prices.

And then see the FANG (Facebook

FULL BOARD, -1.26%,

Amazon

AMZN + 0.10%,

Netflix

NFLX -0.83%

and Google alphabet-father

GOOGL, -0.18%

) + Index

NYFANG -0.31%

“Accelerate at an unprecedented rate that shows clear signs of foamy behavior.” Consider Netflix reports after closing.

In addition to this, investors are not buying much downward protection for the shares, Garnry said. But on the positive side, he said that when this liquidation gets out of the way, the shares will probably continue to rise.

Read: The most optimistic fund managers about growth in almost two years with cash in 2013 minimums

The market

Dow

YM00 -0.06%,

S&P

ES00, -0.16%

and Nasdaq

NQ00 -0.17%

They are retreating from historical highs. That was after a weak day for Europe

SXXP -0.24%

and like most of the actions in Asia

SHCOMP -1.41%

fell in the midst of concerns about the coronavirus. Moody’s downgrade for Hong Kong didn’t help. Oil prices

CL00 -0.50%

They are also under pressure.

The graphic

The anxieties around a viral outbreak similar to SARS are increasing as the death toll reaches six with About 300 infected, and a Chinese official confirmed the transmission from person to person. Fears that the coronavirus virus will spread rapidly occur when China’s Lunar New Year, which involves mass travel, will begin on Saturday.

Our graph shows the actions in the line of fire on Tuesday – China Eastern Airlines

CEA -11.57%,

South China Airlines

ZNH -9.40%,

Cathay Pacific airline

293, -4.07%

and casino operator Wynn Macau

1128, -4.81%,

To name a few.

Market clock

The buzz

Halliburton actions

HAL + 0.06%

They are going up as the oil services company suffers a loss of $ 1.7 billion, but the adjusted forecasts exceeded earnings. Netflix video streamer (preview version), IBM IT group

IBM + 0.37%

and United Airlines

UAL -2.74%

will inform after closing.

More earnings advances: Intel, IBM

Swiss banking group UBS

UBS -3.60%

UBSG -4.06%

He cut the orientation after disappointing results, with his actions sliding.

Disney

DIS -0.15%

It is advancing the launch in Europe of its Disney + transmission service to March.

The phrase

“The American dream has become bigger, better and stronger than ever.” That was the president of the United States, Donald Trump, speaking at the World Economic Forum in Davos. Along with many billionaires and executive directors was teenage climate activist Greta Thunberg, who said world leaders have spoken, have not acted.

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