Cycle Trading

On February 16th we discussed how China was being impacted by the Coronavirus. The impact continues to worsen. The Novel Coronavirus (COVID-19) outbreak and related quarantines continue to impact business and technology supply chains at Apple, Google, Qualcomm, Nintendo, Tesla and elsewhere.

* Airbus: The company shut down a factory in China that accounts for almost 10 percent of the production of its most popular jet
* Apple on February 1 said it would close its stores in mainland China, one of its biggest markets, until February 9.
* Hyundai Motor: The company is idling all seven of its plants in South Korea because of a lack of parts from suppliers in China.
* Mobile World Congress (MWC) Barcelona 2020: MWC organizers on February 12 officially canceled the event.
* Robert Bosch: The chief executive of Robert Bosch, the world’s biggest auto components supplier, warned that coronavirus could impact its global supply chain.
* Starbucks: The global coffee store chain temporarily closed more than half of its stores in mainland China.
* Tesla: The automaker warned of delivery delays in China. Deliveries set for early February would be affected. Tesla’s new factory in Shanghai has been closed due to the outbreak.

And millions of Chinese furs face collapse due to a liquidity squeeze brought on by dwindling cash reserves.

The impact of the Coronavirus on global supply chains are being felt worldwide, yet stocks are near all-time highs.

This was week 20, placing stocks in their timing band for an intermediate cycle decline. Stocks printed a bearish weekly reversal this past week. The bearish weekly reversal eases the parameters for forming a weekly swing high. A break below 3328.45 would form a weekly swing high to signal the intermediate cycle decline. The are bearish divergences developing on the weekly oscillators which ofter precede a cycle decline. And once the impact of the Coronavirus starts to get priced in, that should help to send stocks into their intermediate cycle decline.