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Coronavirus: What’s next for the U.S.?

The Hong Kong flu went on to kill 70,000 people in the U.S. – just two years after a massive, nearly two-decade bull run in U.S. stocks.
Will the same pattern occur with the coronavirus?  As our socionomists point out, your biggest clue about the virus’ efficacy is the waves of mood in the country in question.
There’s no more critical time to monitor waves of mood around the world.
And our flagship Financial Forecast Service can help.
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India's Nifty 50: Does the Bad Jobs Outlook Spell Trouble for Stocks?

India's "employment outlook" just reached its lowest level in 14 years.

By Elliott Wave International

There are a lot of mouths to feed in India -- north of 1.3 billion.
That means a lot of jobs are required to put food on the table for a lot of people. But there's a problem: the jobs picture in the world's second most populous nation isn't pretty.
As far back as a year ago, the Washington Post said (Feb. 1, 2019):
**India's jobs crisis is worse than people thought ...
At the time, a private survey had shown that the number of people working had contracted by 11 million in 2018.
Here in February 2020, the jobs outlook remains bleak.
So, what should investors make of this?
Well, a chart and commentary from Elliott Wave International's February 2020 Global Market Perspective provides insight:
**ManpowerGroup India reported the results of its Q1 2020 Employment Outlook Survey, which showed that only 10% of managers planned to increase staff -- the lowest level in the survey's 14-year history.
**For the past few years we have interpreted apparent troughs in the survey results as bullish for stocks, as prior troughs were in Q1 2009 and Q4 2012. So far, that interpretation has been correct.
"Bullish for stocks"? How's it possible for bad employment data to be bullish for stocks?
Helping you understand seeming paradoxes like these is a unique feature of Elliott wave analysis. It's not that bad news is bullish for stocks. It's more nuanced than that. Our research shows that bad news often coincides with the end of a downtrend in a market's Elliott wave pattern.
That's why EWI's Global Market Perspective rightfully interpreted two prior employment troughs as bullish signals for Indian stocks -- you can see those moments marked on the chart with the first two red arrows.
Unfortunately for them, most investors continue to make a big mistake when they invest with the news, bullish or bearish. As EWI President Robert Prechter stated in a classic Elliott Wave Theorist:
**One of the most important things to understand about the stock market is its relationship to news. Aside from emotional reactions lasting just minutes, news does not cause the market to move in any meaningful sense.
Get important insights into what really drives markets from Robert Prechter in a free 12-minute video, "Learn What REALLY Moves the Markets," a presentation that Robert Prechter made to The International Federation of Technical Analysts.

Junk Bonds: 2 "Golden" Junctures

A recent low in the "CCC yield minus AAA yield" chart occurred very near a key Fibonacci level 

 

 

 

The Golden Ratio -- 1.618 or .618 -- is ubiquitous throughout nature.
You'll find this mathematical proportion in the shapes of galaxies, sea horses, pine cones, the arrangement of seeds on a sunflower head, and numerous other natural phenomena... including the chart patterns of financial markets.
Yes, chart patterns of financial markets are also parts of nature, because they're created by the interactions of human beings.
Moreover, the Golden Ratio is highly useful in setting price targets and forecasting key junctures in those price charts.
Indeed, Murray Gunn, Head of Global Research at Elliott Wave International, mentioned the Golden Ratio in his analysis of the junk bond market in our February Global Market Perspective. Here's a chart and commentary:
The chart shows the yield of CCC-rated corporate bonds minus the yield of AAA-rated bonds, each denominated in U.S. dollars. Junk bonds (the CCCs) underperformed in the second half of 2018 and the subsequent retracement in the yield spread reversed around the [Fibonacci] 0.618 (inverse of 1.618) retracement in May 2019.
Another period of junk underperformance ensued into the beginning of December 2019 from where the spread contracted into last week's low. That low, curiously, was within 4 basis points (0.04%) of the 0.618 retracement of the rally from May to December.
In our February Global Market Perspective Murray also indicates what he expects next for high-yield bonds.
And, while mentioning Murray, you may be interested in knowing that before joining EWI, Murray had worked as a fund manager in global bonds, currencies and stocks. He held long posts at Standard Life Investments and the Abu Dhabi Investment Authority. He then joined HSBC Bank as Head of Technical Analysis.
The bottom line is that Murray brings Global Market Perspective subscribers a wealth of valuable experience beyond his stellar Elliott wave analysis.
And, as you may know, Elliott Wave International President Robert Prechter co-authored a well-known book on Elliott wave analysis, which is titled Elliott Wave Principle: Key to Market Behavior, by Frost & Prechter.
You can now access the digital version of this Wall Street classic 100% free.
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