Big Picture

Our overall Primary Trend Indicator remains Neutral.   Our data shows some caution is warranted from being fully invested as macro risks are elevated with the threat from corona virus and its effects on the global economy.  Concerns have led to massive cuts in airline traffic to and from China which is likely to disrupt growth for a couple of quarters.  The severity of the slowdown from the corona virus outbreak is yet to be fully priced into the market.

Equities, Fixed Income, the USD and Precious Metals are all going up at the same time.  This historically suggests asset inflation is occurring.   This can be attributed to global central banks easy money policy and the sheer amount of money in the system trying to find a home.   

We continue to see positive money flow into momentum stocks in the technology, aerospace and satellites, financials and utilities sectors.   As of late, Bitcoin, crypto currencies  and crypto currency related stocks have begun to show signs of accumulation.

 

Changing Fundamentals

BOJ Senior Official: Japan's Economy Likely To Sustain Moderate Expansion As A Trend On Robust Capex, Govt Spending

 

Focus List

Earnings Season continues to show positive results amid threat from the corona virus on the overall global economy.  Corporations have been resilient in proving to meet expected financial performance.  Many companies have begun to issue forward looking statements on how corona virus will effect earnings in the future.

This morning, Nvidia shares are trading higher on positive earnings results showing gains in sales and revenues.  Canopy Growth Corp. also is trading higher this morning, beating the top and bottom line of earnings expectations.  Financial markets are only 40% of the way through the current reporting quarter, and companies are hitting a 70% meet/beat rate.

The S&P 500 is currently trading at a 12-month-forward price-to-earnings ratio of 18.8, well above its 30-year average.  Bond funds saw their biggest weekly inflows ever ($23.6 Billion), while equity funds pulled in $12.5 billion in the week to Wednesday, mainly driven by technology and emerging market stocks.  Ultra low interest rates and continued monetary policy from central banks are fuelling the rush to risk assets.  We believe caution is warranted at a 12 month forward P/E of 20, which is a sell signal.

One stock to watch is Tandem Diabetes Care.  We have highlighted this stock many times before, we like its focus on providing real time, digital information to Diabetes patients who require accurate information on blood sugar and insulin levels.   The company markets its Slim-X2 monitoring devices, among other offerings, that make insulin monitoring and injections much easier.

Tandem is hitting new 52 week highs amid growing demand for such devices.   Peer group company Dexcom, recently reported strong results suggesting that Tandem will have a similar outcome.   Tandem has recently secured key approvals from Health Canada, EU Health, and the FDA to market and sell its various devices.  Tandem reports earnings February 24.