Coronavirus Ends Weekly Winning Streaks

The spreading coronavirus really stole the thunder from earnings season this week. The biggest impact came today and ruined the weekly winning streaks of the major indices.

Everything was looking pretty good heading into Friday’s session, but a second confirmed case of the sickness in the U.S. put an end to the positive morning.

And they’ll probably be another case confirmed in this country soon, while China has seen more than 800 people infected with more than two dozen deaths.  

The NASDAQ responded by declining 0.93% (or more than 87 points) to 9314.91, which puts an end to its six-week winning streak. The index was down about 0.8% over the past four days.

The S&P slipped 0.9% to 3295.47, while the Dow completed a solid week of red with a decline of 0.58% (or about 170 points) to 28,989.73. Both indices gave up recent milestones of 3,300 and 29,000, respectively. It’s a good thing this was a short week!

The Dow was off around 1.2% over the past four days and the S&P dipped approximately 1%. These declines spoiled back-to-back weekly gains for each of the indices.

Most investors, though, (including several of the editors) will tell you we’re due for a pullback, especially after last week. The indices finished at all-time highs last Friday thanks to a couple of trade deals and a good start to earnings.

Yes, we ARE in the early days of earnings season even if much of the market’s mind is focused elsewhere. And so far, the reports have been mostly positive.

Some of the big news on Friday included a more than 8% surge in Intel after the chipmaker reported a positive earnings surprise for its fourth quarter last night on revenue that topped $20 billion, Also, American Express beat on earnings and revenue, rising more than 2.8%.

And though it’s not earnings related, it should be mentioned that Boeing, which has been a stone in the Dow’s shoe for a while now, advanced 1.66% as the FAA is apparently pleased with the progress its been making with the 737 Max.  

Hopefully, the coronavirus can be brought under control sooner rather than later and allow earnings season to take its rightful place at the forefront of investor minds next week. Because we’ve got a steady lineup of heavy hitters coming up.

We’ll be getting Apple on Tuesday; Facebook and Microsoft on Wednesday; and Amazon on Thursday, just to name a few.  

Here we go into the final week of January. What a crazy year it has already been!

Today's Portfolio Highlights: 

Surprise Trader: For the final pick of the week, Dave is heading to the Financial – Investment Management space. Why? Because its in the Top 7% of the Zacks Industry Rank! Legg Mason (LM) is a Zacks Rank #2 (Buy) from this area that's scheduled to report after he bell next Wednesday. It has a positive Earnings ESP of 1.59%, so the editor decided to buy it on Friday with a 12.5% allocation. He also sold Johnson & Johnson (JNJ). See the full write-up for more.

Stocks Under $10: After just a few days in the portfolio, Alpha Pro Tech (APT) soared by double digits and was the best performing stock among all portfolios just yesterday. You’ll recall that this company focuses on disposable protective apparel and infection control products, including those masks that we’ve been seeing people in China use during this coronavirus. But Brian always said this would be a speculative and short-term play. With the stock “going ballistic” and then coming off the high this afternoon, the editor has seen enough. He decided to sell APT on Friday and collect a 22.3% return in less than a week!

Insider Trader: "After the big run in stocks to start the year, which most would agree was overdone, it shouldn't be surprising that traders are taking profits and moving to the sidelines.

"I'm actually surprised the sell-off wasn't worse than it was on Friday, as the weekend looms and there's a lot of uncertainty about the spread of this virus worsening.

"However, next week is a huge one for earnings. All it will take is a few blowout quarters by the big titans like Microsoft and Amazon and the jitters may be quelled.

"I'm excited about next week. Q4 is really in the rearview mirror already, but we should hear guidance from many companies and I think it will be good, at least in tech." -- Tracey Ryniec, who sold Occidental Petroleum (OXY) today for a 9% return in a little over a month.

Have a Great Weekend!
Jim Giaquinto

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