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Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels

Stock-Markets / Investing 2020 Apr 25, 2020 - 05:32 PM GMT

By: Nadeem_Walayat

Stock-Markets

The Coronavirus trend trajectories for both the UK and US ARE IMPROVING! I.e. Targeting 36,000 US deaths and 10,000 UK deaths far below the likes of Dr Fauci have been bandying around of a minimum of 100,000 to 240,000 deaths. With some late to game so called Medical experts are getting carried away with projections running to 1 million plus for the US which is NOT reflected in the trend trajectory. So it looks like many people have become infected with EXTREME PESSIMISM which is what happens at major market bottoms, as I concluded last week that we have probably seen the bear market low at Dow 18,200 which this weeks coronavirus data is confirming.

Therefore this improving coronavirus trend 'should' resolve in relative stock market strength during the coming week.


This is the 3rd and final part of my analysis (UK and US Coronavirus Trend, America's "Pearl Harbour" Moment in War with China Mega-trend) that was first be made available to Patrons who support my work:

  • UK and US Coronavirus Catastrophe Due to Government Negligence
  • America's "Pearl Harbour" Moment - War With China Mega-trend
  • US Coronavirus Infections and Deaths Trend Trajectory Current State
  • UK Coronavirus Infections and Deaths Trend Trajectory Current State
  • Stock Market Trend Implications
  • AI Stocks Buying Levels
  • WIndfall Taxes
  • Risk of Death

So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

Stock Market Trend Analysis

My existing forecast as of 9th March is for the Dow to make a low late March and then to target a volatile uptrend into the end of April 2020.

Last weeks update concluded in expectations in line with my forecast for the Dow to target a trend towards 20k during the coming week from the last close of 21941.

The updated chart shows the Dow trending to a low of 20,700 before closing the week at 21,052, with the direction of travel into the close being down.

(Charts courtesy of stockcharts.com)

However, given the early signs of an improving Coronavirus trend, and with my expectations for an overall upwards bias to the stock market for April, then it is highly likely that the Dow will trend higher during the coming week, where I would not be surprised if we see the Dow trade above last weeks high of 22,600.

AI Stocks Sector Buying Levels

Taking a quick look at where the AI stocks closed Friday then most are marginally lower then where they closed on 27th of March i.e. Google $1093 vs $1110; Amazon $1906 vs $1944. With some such as Microsoft showing relative 153.8 vs $149.7. Which implies savvy investors are bidding the stock higher despite general market weakness, which is a signal in it's own right that you too should own Microsoft as the smart money is buying the Coronavirus PANIC! Rising stocks in a downtrend are a major indicators of underlying strength. Thus it is highly probable that Microsoft will be trading at a NEW ALL TIME HIGH this year, that's north of $190!

So once more if you take one message from my articles than it should be NOT to BLOW THIS OPPORTUNITY TO PICK UP AI STOCKS at deep discounts to where they were trading just a few weeks ago.For we are now AT MAX PESSIMISM where even usually upbeat medical professionals are talking nonsense with their projections of 1 million plus US deaths. As the trend trajectory is starting to suggest that the US is heading for LESS than 50,000 deaths by the end of April and likely to further converge towards my forecast of 26,550.

Now imagine how that will be perceived when actual numbers start resolving to ONE QUARTER the MINIMUM expected figure of 100,000 deaths with many expecting 250,000 US deaths in line with White House scientists (Fauci and Brix).

So as I stated last week, if your seeking to accumulate stocks in the AI mega-trend then do not waste this continuing opportunity for my analysis continues to resolve to expect most AI stocks to trade towards or at NEW ALL TIME HIGHS later this year!

Coronavirus Windfall Taxes

However there may be future consequences for all those who have profited from the coronavirus crisis, which is primarily internet stocks and the banking sector and financials such as PAYPAL that are profiting from this crisis as consumers and central banks throw hundreds of billion of extra dollars at them each week.

As the corporations start announcing record profits due to the surge in online service demand then there will likely be growing calls for windfall taxes to be levied against these profits, which will likely result in some downward stock price pressure, so there could be further buying opportunities later in the year as AI stocks take a temporary tumble in the face of such announcements of seeking to share the economic burden of the Coronavirus Depression as governments try to fill the gaping holes in their budgets left by the Coronavirus stimulus and bailout packages.

Risk of Death From Covid-19

The following are probabilities of dying if one contracts Covid19 over the coming weeks and months which is based on data from the Journal of American Medical Association and the Lancet's analysis of Italian and Chinese deaths.

Of the 1700 italian deaths analysed, 63% were Male, which resolves to a CFR of 4.7%, whilst the CFR for Women was 2.8%. So men are at near twice as high risk of death than women, which is likely due to life style differences.

Covid-19 appears to punish age, where the younger one is then the less likely one is to die. In fact if one is under 30 then the risk of death is negligible.

Whilst if those between 30 to 60 have a general risk of death of less than 1%, which is still about 10 times the flu but not as bad as it could be.

However, at above the Age of 60 the case fatality rates starts to become horrific, rising from 3.5%, then to 12.5% and 20% for those 80-89.

This data also confirms that the Chinese lied about their number of deaths as their data CFR is less than half Italy's.

So why is age proving to be such a significant indicator of likelihood of death.

The older people are then the more likely they are to have comorbidities where those with heart disease had a 13.2% risk of dying, diabetes 9.2%, Hypertension 8.4% and Cancer 7.6%.

Therefore the primary determinate of whether one dies as a consequence of covid-19 is less so age but rather whether people have comorbidities which are more prevalent in elderly people hence the higher death toll, that and people become more frail with age i.e. immune systems that are less able to survive the covid-19 onslaught.

So if you are young and have a comorbidity such as diabetes then don't delude yourself that you are safe because your not. So take preventative actions to self isolate so as to survive the Coronavirus storm.

And lastly Obesity, where italian deaths were concerned BMI proved to be a significant indicator of risk of death, where basically the higher ones BMI then the greater the likelihood of death which probably is due to obese people tending to be more likely to have comorbidities.

72% of italian deaths were people who were overnight or obese.

28% of deaths were people of normal weight.

Whilst under weight people accounted for just 0.6% of deaths. Which should be taken as cue to shed some extra pounds NOW so as to reduce ones risk of death from Covid-19.

Therefore people who are underweight, under the age of 60 and have no comorbidities are at very low risk of death, probably around 5 times that of the flu.

And people who are Aged 30 to 60, and just over weight are at about 25X to 40X risk of death than the flu/

Whilst those at the highest risk are the over 60's who are over weight and have 1 or more co morbidities who are likely at 70X to 200X the risk of death than from seasonal flu

So whilst we cannot do much where co morbidities are concerned, however we can reduce our risks of death from covid-19 by shedding a few excess pounds over the coming weeks and months.

This extensive analysis was first be made available to Patrons who support my work: UK and US Coronavirus Trend, America's "Pearl Harbour" Moment in War with China Mega-trend

  • UK and US Coronavirus Catastrophe Due to Government Negligence
  • America's "Pearl Harbour" Moment - War With China Mega-trend
  • US Coronavirus Infections and Deaths Trend Trajectory Current State
  • UK Coronavirus Infections and Deaths Trend Trajectory Current State
  • Stock Market Trend Implications
  • AI Stocks Buying Levels
  • WIndfall Taxes
  • Risk of Death

So for immediate first access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.

And ensure you are subscribed to my ALWAYS FREE newsletter for my next in-depth analysis.

Your analyst needing to quickly lose some weight.

Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2020 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.

Housing Markets Forecast 2014-2018The Stocks Stealth Bull Market 2013 and Beyond EbookThe Stocks Stealth Bull Market Update 2011 EbookThe Interest Rate Mega-Trend EbookThe Inflation Mega-trend Ebook

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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