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  • ETF Tracker Newsletter For January 24, 2020

    ETF Tracker StatSheet          

    You can view the latest version here.

    Markets Suffer From An Infection

    [Chart courtesy of MarketWatch.com]

    1. Moving the markets

    An early bounce turned out to be short-lived, as ongoing issues with the coronavirus infected the markets, with equities registering their first losing week for this year. Despite the pullback, the S&P 500 remains still up by almost 2% for 2020.

    A last hour rebound reduced losses, which were less than 1% for the major indexes. Again, the fear is that China’s coronavirus may disrupt travel and slow down global growth.

    Even good quarterly earnings reports by Intel and American Express were not enough to establish confidence and motivate dip buyers to step in.  

    ZH summed up the market effects like this:

    1. Shanghai Comp’s worst week in 8 months
    2. S&P 500’s worst week in 5 months
    3. “Most Shorted” stocks had their biggest weekly drop in 4 months
    4. France’s CAC 40 worst week in almost 4 months
    5. VIX’s biggest weekly spike in almost 6 months
    6. HY Bond Prices worst week in almost 5 months
    7. Treasury yields biggest weekly drop in 4 months
    8. Yield curve’s biggest weekly flattening in 2 months
    9. USD’s best week in 2 months
    10. Yuan’s worst week in 4 months
    11. Copper’s worst week in over 5 years
    12. Oil’s biggest weekly drop in 8 months
    13. Gold’s 6th weekly rise in last 7 weeks

    Despite various squeeze attempts, when looking at the entire week, the most shorted stocks won the squeeze fest for a change by doing what they do best, go lower.

    With weakness in the markets being prevalent, you would have thought that the divergence between stocks and bonds would finally narrow, but it didn’t, as this chart from Bloomberg shows. Sure, stocks dropped but so did bond yields, thereby keeping the spread as wide as ever.

    The propagation of the virus, or hopefully its containment, will be closely watched over the weekend, but it will likely have further effects on market direction.

    (more…)