|Day's Range||12.33 - 12.33|
When worries over the coronavirus shook U.S. stocks out of a period of quiet trading last week, investors wondered if the outbreak was the “Black Swan” event that would trigger a sharp decline. The sharp snapback has revived concerns among some investors that market participants are growing overly confident that easy money policies from central banks will underpin prices, despite serious risks to global growth from the coronavirus. Two deaths have been reported outside mainland China, in Hong Kong and the Philippines, prompting countries to quarantine hundreds of people and cut travel links with China.
Buy the dip in stocks and then sell the rip higher. Here’s how Bank of America. analysts explain that strategy amid the spread of coronavirus in China.
Large options trades some people have attributed to the mysterious investor known as "50 Cent" have become more profitable in recent days, as fears of the economic impact of the coronavirus injected volatility back into stock markets. Earlier this month, at least one investor bought large blocks of February calls on the CBOE Volatility Index at a price of around 50 cents each. The calls, which increase in value when the VIX rises, would be redeemable should the VIX hit 22 by late February.
Many are comparing the current coronavirus scare to the SARS outbreak in February 2003. But the stock market’s technical condition is completely different.
U.S. District Judge Manish Shah in Chicago found no proof that Cboe Global Markets Inc intended to defraud investors by letting the "John Doe" traders manipulate options and futures tied to the fear gauge, known as the VIX, to generate higher transaction fees. In a 48-page decision, Shah said he found no plausible allegations that Cboe knew who the John Does were or worked with them to rig the VIX, as Cboe Volatility Index is known, or that Cboe's failure to enforce its rules caused losses for investors not involved in any manipulation.
The stock market has predicted nine of the past five recessions, according to the famous quip of economist Paul Samuelson. Surely, though, last year’s 29% gain in the S&P 500 index portends robust growth during 2020, doesn’t it? Not necessarily, according to David Ranson, a familiar name to Barron’s readers, who heads HCWE & Co.—even though it would be consistent with the long-observed presidential cycle, in which the third year traditionally is the best of the four-year term for stocks, as Washington tries to stoke the economy ahead of the election campaign.
Politics and profits will influence the stock market more so in 2020 than they have in any other year over the past decade, according to Doug Kass of Seabreeze Partners Management, who calls himself “a cynic looking for truth.”