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January 26, 2020 | US Futures Poised to Gap Down on Coronavirus Scare: What Then?

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
US futures are poised to gap down at the Monday opening. Things can easily change overnight but this is likely to stick.
What is a Gap?

  • A gap up occurs when the market or an individual issue opens higher than the high on the previous day.
  • A gap down occurs when the market or an individual issue opens lower than the low on the previous day.

In this case, S&P 500 futures are at 3257 with the low on Friday at 3281.53.

The close on Friday was 3295.47, but that is irrelevant. This gap down, assuming there is one, will close at any time in the future when the S&P 500 trades at or above 3281.53.

Gaps Act Like Magnets

I am a firm believer that Gaps fill sooner or later but typically sooner.

However, gaps can take days, weeks, months or even years to fill.

All the while, they act like magnets.

Best Bear Case

The best bear case is if this gap down fills quickly then the market collapses as soon as it does.

Coronavirus Scare

My title reads “Coronavirus Scare” but this is more than a scare, at least for China.

There are so many unknowns, but we are well beyond scare to the question.

Black Swan?

How bad will it be? A black swan?

I don’t know, nor does anyone else. But I do know Global Coronavirus Cases Jump 50% Overnight, 5 Now in US.

I also know 5 Million Potentially Infected Chinese Fled Wuhan before a travel ban was imposed.

Let that stat sink in along with the fact that the incubation period is up to two weeks and mutations could be higher.

CDC Way Behind the Curve

I can also tell you that the Center for Disease Control is way behind the curve. See the above link for a discussion of their allegedly “proactive” measures and what a sorry joke they really are.

The CDC does not inspire confidence.

If you want better reporting and better tips I suggest following Chris Martenson who just reported Coronavirus Pandemic Event Now A Serious Risk and Dr. Dena Grayson on Twitter.

Also, do yourself a favor and watch Chris Martenson’s Must See Video on the Coronavirus.

Mike “Mish” Shedlock

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January 26th, 2020

Posted In: Mish Talk

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