With the number of cases of infected with the coronavirus rising to 100,000 globally, the sentiment today in the North American and European indices is again of loaded pessimism. Investors readjusting their expectations for the first half of this year at least. Be it at the level of the economy as a whole, but more importantly for the market, at the level of the financial behaviour of companies, after many have already made it public that they will be impacted by the global health crisis that is now in the spreading phase outside the China. In the S&P500 energy sources continue to be those that lose the most value with a devaluation of -4.7%, slightly better than the behaviour of the crude price, which sinks more than -5% in both types, WTI and Brent, after indications that Russia rejected OPEC’s pre-agreement for a cut in production.
But despite the heavy red that crosses the entire market, the fact that VIXX, which measures volatility has reached close to 40, it is important to frame this movement, since the S&P500 for example is still above the lows reached last week, almost another 100 points, which means we are still not talking about a sharp breach of confidence that could lead to a test of the various minimums reached between August and September 2019, an area where some extra support is expected. Another important fact at the technical level is that this second negative incursion is being made with less relative force, which can be seen for example in the stochastic, which may even be on the way out of over-sold territory. This means that although caution remains the watchword, the scenario at this stage is not as dark for the Bulls as it may seem at first glance, so it is important to wait a few more days to be able to gauge more reliably whether or not there will be a double fund at these levels, or if we go to Bear market land.
