Atlas Market Outlook – March 1st, 2020

by | Mar 2, 2020

Money Management Newsletter & More

Atlas Market Report
March 1st, 2020
Market Commentary (Key items you need to know):
  • Market Outlook by Ronald E. Lang
  • S&P 500 Index Technical Analysis
  • Fun Links (always popular)
  • Additional Commentary by Allen B. Lang, Senior Portfolio Manager
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Key items you need to know –
Stop me if you heard this recently, “the Coronavirus is in all the headlines and hasn’t been contained yet”. This started in early January and hasn’t been handled well by the Chinese government and when they finally started to put mandates on their population in early February, it put a major crimp in the global supply chain. MANY multi-national companies that rely on China for their products have now see significant delays in receiving their products and several Chinese have been told to stay home through mid-March. That being said, if they find a cure and inoculate the virus by mid-March, then the factories would start back up again and shipping would resume by end of March and it goes on from there. So companies that would have received their products by end of February, will now receive them in April. This scenario only applies IF it is contained by mid-March. All that truly spooked the market and the major selloff this week. We were just at all-time highs over a week ago.
We are not scientists and don’t intend on playing one on TV. That being said don’t listen to too many TV programs or read Internet articles that will make you upset. Remember, the media is trying to strike at your emotions and the information they are dispensing is more entertainment than for real news. When the vaccine is finalized or the Chinese have it contained, it will be announced. Until then, you need to live your life. If you have to travel internationally in the next 30 – 60 days, perhaps you need to really consider how necessary that trip is in your life right now.
If the virus isn’t contained by mid/end March, expect there to be another sell off of similar size. This will have a prolonged negative economic impact on the global market.
Escalator Up and the Elevator Down
This is the saying when you are a technical analyst. If you look at the charts, the Bull run to the upside is a slow methodical trend and when there is a selloff, it looks like pricing fell off a cliff. Take the Escalator Up and the Elevator Down. There is always panic when you see selling like this. If history is our compass, we know that things are always overdone. Meaning, we usually overshoot to the upside and we go much further to the downside than a normal selloff. It is human nature.
We received many calls and emails this week asking us our thoughts. For the most part, we’ve shared them in this newsletter and we are slow, surgical Buyers on this dip. Looking for good dividend paying stocks that have solid balance sheets and nibbling away to add or build a position. We believe there is more volatility ahead and the best thing you can do especially if you are investing for the “long-term” is add to your best positions while the selloff is happening. As we expect to return to recent highs by the summer, you will have compounded your best positions and gains.
Also, as we told many clients, after a week that we just had, expect there to be more selling on Friday (which we had). The reason for Friday selling, you have two days for the weekend which you don’t know what will happen so no investor wants to be significantly long with positions until they can trade again on Monday.
Other noteworthy items:
10-year Note hit an all-time low at 1.15%. The 10-year Note is known as the North Star for the market and as it goes up that is good for the economy and when it goes down that means it is struggling. For an event like the Coronavirus, it will have an effect on the Bond market too.
96.4% of the S&P 500 Stocks (287 out of 505) have had at least 10% Correction.
Over $50 Billion added to Credit Card debt in 2019. This stat is troubling!
S&P 500 Index Chart
Technical Analysis
(To Enlarge: Right Mouse-Click on Pic Below / Then “Open in a Browser” or “Open in a Tab”)

In Summary
If you have cash on the sidelines, look at your watch list and start nibbling away at the best stocks on that list, especially the good dividend paying stocks or ETFs. Cash on the sideline is “dead money”, but “Cash is King (or Queen)” in these market situations. Don’t shy away from investing, especially if you are a long-term investor. Be smart, invest wisely!
If you have questions, DO NOT hesitate to reach out to us. Give us a call. Enjoy a prosperous March!
Authored by
Ronald E. Lang, Principal
Atlas Wealth Management, LLC
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Additional Commentary by Allen B. Lang, Senior Portfolio Manager
As I write my comments, the market, overall, is down 14-16% depending what index you follow.
In previous newsletters we thought there would be some high volatility, but not in one weeks time. The terrific run we had is not over. This is just a correction that is normal in markets, both up and down. An 8-12% correction was expected by many and we have exceeded that. That is not to say that we will not see more volatility, because we will.
The MOST IMPORTANT thing to remember is, “Do you own quality investments with historically good sales, quality earnings and a history of raising dividends along with a leading position in their industry?” If you do, then corrections in the market, while it may create angst, is only temporary. We are not in the situation of the late 1920’s. We have a strong economy. We make, and continue to, provide the world with products, and their orders are not going down, but up.
Believe me when I say, that if we thought any investments currently in our portfolios warranted a sale we would have advised our clients.
OK let’s talk about the Coronavirus. Why, because it is on everyone’s mind. The Chinese government was late in letting the World Health Organization (WHO) they had a problem when, whatever they were working on, escaped into the public areas. When they realized they had a problem that was not able to be solved immediately they notified WHO and the nations. Immediately many nations and their pharmaceutical companies started working
on a cure. These companies have been working 24/7 since the WHO released the information. One particular company has said they have positive results in lab tests and that the FDC is putting it on a “fast track” for further testing. Other US companies have said they too have positive initial results. An Israeli company has said they have found a successful drug to combat the Coronavirus. We are not in the epidemic stage (yet), and I believe all nations are working together for a cure. In the meantime, fortunately, the amount of cases in the US is very low.
Yes, this situation is a tragedy, but not like the Chernobyl fiasco decades ago, when a Russian nuclear plant had a meltdown and Russia never released the true destruction that the meltdown could and did cause. Not only did hundreds die, thousands of farm animals were contaminated from nuclear waste clouds that blew over Europe.
The Coronavirus, and its potential for disaster obviously affected our stock market. So many companies have international clients that they cannot deliver to or in many cases, we cannot receive goods from countries that have had breakouts of the virus. This tragedy only pushed up the time line for our market correction.
As I said in our 2020 Outlook, I still believe we will hit new highs in the indexes. But as we close in on the election in November we will witness a good deal of volatility.
We like to make this newsletter a “quick read” with small bite-sized chucks of topical information so you can understand what’s going on in the markets and economy and if it may affect you, give you time to make the steps necessary to protect yourself or take advantage of it.