Thinking that Coronavirus is not a big deal? This chart will fix your complacency. (February 25, 2020)
I want to show you a chart here, I saw this over the weekend, it’s on Zero Hedge, it is a chart posted by QTR Research, which is “Quoth the Raven”. Some guy, I forget his name, he is a fairly well known guy, he has a podcast with a lot of curse words in there so I am not recommending that people listen to the podcast for that specific reason. He is a sharp guy, he has great guests on and stuff like that.
I like some of the stuff that this guy posts and this is one chart that he posted in Zero Hedge the other day on February 21st, about the Coronavirus. It is a 40-second long video and I am just going to let it go and I am sure I will probably narrate a little bit because I can’t help it. This is what you have got to be looking at here. This is the MERS virus; this is the Swine Flu. This is the Coronavirus that we are dealing with now. This is SARS and this is Ebola; that’s the stuff that all the movies are made of.
On day 4 since the outbreak, you can see that MERS wasn’t that big of a deal. Swine Flu certainly was. Then Coronavirus, thanks to our good friends the Chinese, of course, it is up big time and then magically it is like, we’ve got no issues whatsoever. SARS kept going. And then of course Ebola was the worst.
So if we just watch and see how this unfolds, watch and see what happens. We will just start it from the beginning because it is actually pretty interesting how this plays out. Watch what happens here: SARS goes up, we’re in day 7, day 8, Coronavirus, no big deal. Now watch what’s going on: there goes SARS, wow, that’s horrible. Ebola, Coronavirus, not a big deal. Oh, oh, we’ve got a new winner and that my friends is a problem, we will just leave it there.
This was the most graphic illustration that I have ever seen as far as why this is kind of a big deal. And also, think about it; why public officials are playing this down. As I have said before, I personally think this was a bio-weapon that got out of hand. That is just a personal feeling; I have read a few articles about it here and there. I am not a real conspiracy guy, I do believe that Lee Harvey Oswald acted alone, so I am not that kind of guy. But it just makes all the sense in the world to me based on the way these governments are acting.
Nobody wants to tick off China by saying, “Hey, what happened? It seems to me like you were doing something that you weren’t supposed to be doing.” Nobody wants to tick off China; you don’t want to come off as a racist either because these days that is fashionable. You don’t want to panic the citizenry, such as, what would happen if there really were UFOs? Everybody would be freaking out, we’ve seen this in Independence Day. The bottom line is, this is a pretty serious thing. And the fact that everybody is downplaying it on the government side, all governments, is frankly, more indication to me that it is something bigger.
The only reason I am pointing this out is that I think it is important for you to understand that what you are hearing from our “authorities” and even from market big wigs, if there is such a thing; what you are hearing is not really consistent with the facts. Again, I am not here to scare anybody, it is what it is. I don’t know any more than these other people, I’m sure I actually know less. But I do know this: They don’t know as much as they are trying to make you believe they do.
So whether it’s our president or somebody else saying it’s not that big of a deal they’ve got it under control. Just beware of this chart, this is a unique thing, it’s a really different thing. Back here sure it wasn’t a big deal, oh, it’s not as big as SARS. Well, that was a few weeks ago. But as we move up here we see that suddenly, boom, this thing has taken off into outer space. This would make Elon Musk proud, the way this thing is going into orbit.
Just be careful about being complacent on this stuff. Look at the charts, look at the charts of your stocks and let those dictate what you do and what you don’t do. And I want you to think about it this way, this is an important thing; if you can’t find a good entry on a stock then you can’t find a good trade. It starts with the entry and the reason I came into Monday with about 4 very small stock positions, that’s it, and then some NUGT ( NYSEARCA: NUGT ), which I kind of traded out of.
The reason I came in on Monday with so few stock positions wasn’t because I was afraid that the market was going to sell-off, that I thought on Friday or Thursday, oh my gosh, we’re going to get a big sell-off. I have been waiting for this type of thing because I knew that traders were under-appreciating the gravity of the Coronavirus thing, but that doesn’t make me smart, gobs of people are waiting for that.; they just don’t know what the timing is, when is that going to happen? But at some point people are going to wake up and say, “What the heck is going on, what am I doing here?” And that happened today.
The reason I came in so lightly invested in my trading account had nothing to do with prediction, I couldn’t find anything to buy. I couldn’t find anything that met my parameters for getting in, for taking a low-risk entry point on a really good setup; I couldn’t find any setups. All the good stocks had setups a month two ago and now they are not that good anymore, they are just stocks that have run too far.
If you are pretty new to trading hopefully this is kind of an epiphany for you. If there is one thing that you have got to think about, just one thing, think about entries. There is position sizing, stop losses, things like that. There is all that stuff that is really, really important too. I am not saying that entries are THE most important thing. I am saying that they are the FIRST thing. They are the first thing. If you don’t have a good entry and listen to me, this is important, if you don’t have a good entry on a stock then where you put your stop, what your position size is, where your anticipated exit is for a profit, none of that matters; because you don’t get to that part of the analysis until you have a good entry. I am not going to talk about what a good entry is here in this video.
What I am talking about here is essentially kind of market timing. The way you would have been able to time this market with respect to coming into the day very lightly invested or maybe even all in cash had nothing to do with the posers of prediction, nothing, nothing. There is no such thing as market timing here, it is just I can’t find anything to buy. So I am not going to lower my standards, I guess I will just sit in cash and wait for things to set up. And then magically you come into today and you go, oh, now I know why I couldn’t find anything to buy. It is a darn good thing I didn’t lower my standards.
That’s all I have got to say aboiut this. But these charts, don’t they tell you a lot about what’s really going on? And you are not going to hear that from CNN, Fox, CNBC, etcetera, etcetera, you are not going to hear this kind of stuff. Everybody wants to either be political or they want to calm you down and help you think that it’s not a big deal. It is a big deal. It is not necessarily fatal, in fact, not at all. The vast majority of people recover from this thing but that is not the point. The point is, this is a growing issue and we don’t know the extent of it but we sure do see a lot of empty streets in China and probably a lot of empty berths on cruise ships so that smacks of a sluggish economy. So this chart matters and so does a sluggish economy matter to the stock market. I think we are finally catching up to what’s going on here.
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