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Jul 29, 2020

Covid-19 Narratives Driving the Markets

Our vocabulary has expanded this year. How many people knew the term “novel coronavirus” before January 2020? We’re familiar with SARS and H1N1. Everyone’s contracted a form of the flu at some point. Parents have herded their children inside to avoid mosquito born EEE. Those harrowing narratives have been common in recent years. This is different.

Covid-19, the newest novel coronavirus, is a world-wide pandemic. As of today, it has infected fifteen million people and killed over six hundred thousand. This virus has affected out thoughts, behaviors, and at times crippled national economies. The carnage seems to have settled for now, but what happens if we get a second wave, as health experts predict?

Obviously, the markets have been affected by all this. As a trader, it’s difficult to wrap your head around because technical analysis alone cannot accurately predict market behavior during conditions like we are currently experiencing. You need to rely on fundamental analysis. Watch the news. The following narratives are likely to affect the markets.

Narrative #1: Huge Crowds at BLM Protests and Trump Rallies in the US

Let’s start with the United States. Divided into fifty states with individual governing authorities controlling lock downs, it’s difficult to predict if, when, or where a second wave might arise. Some states have been cautious in their re-opening strategy. Others, like Florida and Texas, sprung everyone from their homes far too early. Covid-19 numbers are already rising there. 

Add in massive crowds protesting for the Black Lives Matter movement and election rallies for President Trump. The country, particularly in the larger cities, is now a petri dish for another outbreak. When and where will that happen and how will it affect the market? Here are a few possible scenarios you should look at before making any trade decisions: 

  1. Texas is in trouble. After a knock-out blow delivered by the Saudi/Russia price cuts earlier this year, another coronavirus shutdown could spell the end for many of the smaller oil companies working the Permian Basin and East Texas Oil Field. Look for mid-size firms on the brink and bet on the downslope. 

  2. Florida is also on the verge of another shutdown. Carnival (CCL), Royal Caribbean (RCL), Spirit (SAVE), Marriott (VAC), and Hertz (HTZ) are based there. Most of these stocks have already dropped to historic lows. Expect that decline to continue.

  3. California, despite a surge in new cases, is doing fine. Home to Apple, Tesla, Netflix, and eBay, the technology capital of the US has actually thrived throughout the Covid-19 crisis. Look for big upsides on some of these firms if the country shuts down again. 

There’s no predicting how the large crowds that gathered during the height of the virus will impact the health care system in the United States, so stay away from health stocks. Moderna did close a deal with the Pentagon this week. Get your money now. They’ve never delivered an approved product before. It’s questionable whether they’ll be able to do it this time. 

Narrative #2: Constitutional Voting and Victory Day in Russia

With 67% of voters showing up for constitutional voting on July 1st and massive crowds turning out for the rescheduled Victory Day on June 24th, Russia may be at risk for a second wave of Covid-19 cases in a few weeks. Keep that in mind if you’re trading on the Moscow Exchange. Returns are likely to start declining soon, so don’t bet on a continuing upslope.

The best move in the Russia space right now may be in the forex market. The ruble is showing a downtrend at the moment, so traders are selling and looking for put options. The Stochastic indicator suggests a 58% chance of an uptrend happening soon. The ruble has exited the oversold zone, which usually results in a price increase. Be prepared to buy on the upslope.

Expect Yandex (YNDX) to end its brief bull run later this week. It’s been sitting in the overbought zone for ten days and the bubble is expected to break. Look to sell or grab some put options to leverage your portfolio. Bloomberg predicted this week that the Russian economy is expected to shrink 5.4% this year, so downtrends are likely to happen soon. 

Narrative #3: Singapore GDP Plunges 41.2%

The Asian markets took yet another hit this week when Singapore sunk into recession with a 41.2% drop in gross domestic product. The export-dependent nation is just the latest casualty in a region devastated by Covid-19 outbreaks and their corresponding shutdowns. Singapore had eased its lockdown on June 1st. It’s now facing an outbreak of Dengue Fever.

Singapore is not alone. Japan is showing a 20% decrease in GDP. China seems to have weathered the virus and is starting to show economic growth again, making the Yuan a good play for traders. Check out WisdomTree Chinese Yuan Strategy ETF (CYB). The Aroon indicator shows it in the uptrend. The momentum indicator gives it a 27% chance to stay there. 

One scenario to watch in Singapore is the human clinical trials authorized for a new vaccine developed by Arcturus Pharmaceuticals in San Diego (ARCT). Arcturus is listed on Tickeron as a solid buy with a momentum indicator that shows a 73% chance of a continuous uptrend. Be prepared to buy and hold, though. This is definitely not a day trade.

Narrative #4: Israel Re-Implements Shin Bet Covid-19 Tracking System 

This is an interesting scenario with a hidden investment opportunity. Israel has long been known for having some of the best security technology in the world. They are now using that tech to track and monitor their own people for Covid-19 outbreaks. The national domestic security agency, Shin Bet, is in charge of the program.

Yuval Diskin, a former head of Shin Bet and one of the minds behind their security system, cofounded a cybersecurity startup in 2018. The company is called Opora. They recently did a round of seed funding ($7 million) with Jerusalem Venture Partners, the venture fund that launched IPOs for CyberArk, QLIK Technologies, and Cogent Communications. 

Watch for an IPO from Opora. The media attention that Shin Bet tech is receiving right now should drive the price up quickly. In the meantime, CyberArk (CYBR) is showing as a strong buy with a 70% uptrend on the momentum indicator. Cogent Communications (CCOI) is also on an uptrend with a 72% chance of staying there. Israeli tech companies are looking good.   

 Narrative #5: Australia Sets a “Hard Boundary” around Melbourne

With new cases spiking in Melbourne, Australia made the decision this week to set up a hard boundary around the city. The lockdown covers the city and nearby region of Mitchell Shire. Residents are essentially locked in. Only people needing medical attention and essential workers are allowed to leave their homes. Victoria Police have roadblocks set up.

The response seems extreme, but the number of new cases continues to rise, definitive signs of a second outbreak. The benchmark S&P/ASX 200 index showed a 1.3% decline yesterday, falling 81 points to 6075.1. Health company Mesoblast (MESO) was one of the biggest losers of the day, falling 6.8% to $3.45 per share. The Australian dollar has stayed strong. 

Is there a trading opportunity here? Pay attention to the signals. The biggest gainer on the ASX yesterday was Resolute Mining, which surged 12.9%. The stock is only selling for $1.40 a share, so there may be a decent call option there, but it’s the industry they are in that you’ll want to monitor closely. Resolute Mining explores, develops, and operates gold mines.

In times of uncertainty, gold goes up. Barrick Gold (GOLD) closed Wednesday at a five-year high of $28.52. Tickeron Signals recommends it as a Strong Buy. The momentum indicator shows the stock on an upslope with a 77% chance of staying there. It’s a good buy and hold, an opportunity for call options, and has enough intraday movement for day traders.     

Tips for Riding out the Second Wave

Tech stocks were the most resilient during the first wave. There’s no reason to believe we won’t see the same scenario during the second wave. Amazon will continue to uptrend. Netflix is volatile and needs a content infusion, something that’s unlikely to happen if film production studios remain hindered by lockdowns. Keep an eye on that situation in California.

Play the forex market. National currencies are showing a lot of movement right now. Crypto is an area of opportunity also. Consumer confidence around the globe has wavered when it comes to their own governments, a natural reaction to personal adversity. Cryptocurrencies are expected to surge in the upcoming months if we see a second wave.

Use common sense. What we are about to go through is unprecedented on a global scale. As the summer wains, Covid-19 will surge. Traders should look forward to new opportunities. There’s a presidential election coming up in the United States in November. That will rock the markets, regardless of results.  

P.S For crypto-enthusiasts, join the Investor Club: "Nakamoto Club"

Related Ticker: APDN

APDN in -5.38% downward trend, declining for three consecutive days on June 12, 2024

Moving lower for three straight days is viewed as a bearish sign. Keep an eye on this stock for future declines. Considering data from situations where APDN declined for three days, in of 361 cases, the price declined further within the following month. The odds of a continued downward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bearish Trend Analysis

The Aroon Indicator for APDN entered a downward trend on June 14, 2024. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.

Bullish Trend Analysis

The Moving Average Convergence Divergence (MACD) for APDN just turned positive on June 06, 2024. Looking at past instances where APDN's MACD turned positive, the stock continued to rise in of 49 cases over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where APDN advanced for three days, in of 172 cases, the price rose further within the following month. The odds of a continued upward trend are .

APDN may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.685) is normal, around the industry mean (22.665). P/E Ratio (0.000) is within average values for comparable stocks, (82.398). Projected Growth (PEG Ratio) (0.000) is also within normal values, averaging (5.589). Dividend Yield (0.000) settles around the average of (0.018) among similar stocks. P/S Ratio (0.619) is also within normal values, averaging (51.536).

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating slightly worse than average price growth. APDN’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. APDN’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 87, placing this stock worse than average.

Notable companies

The most notable companies in this group are Abbott Laboratories (NYSE:ABT), Intuitive Surgical (NASDAQ:ISRG), Medtronic plc (NYSE:MDT), Boston Scientific Corp (NYSE:BSX), Edwards Lifesciences Corp (NYSE:EW), IQVIA Holdings (NYSE:IQV), Align Technology (NASDAQ:ALGN), Illumina (NASDAQ:ILMN), Exact Sciences Corp (NASDAQ:EXAS), Guardant Health (NASDAQ:GH).

Industry description

Medical specialties are companies that make equipment used by the health care industry. Equipment manufactured and distributed by these companies include dialysis machines, blood analysis equipment, surgical equipment, dental instruments, and diagnostic tools, among other items. Large companies typically aim to produce and distribute high-quality products across a broad market spectrum. Smaller firms are more likely to specialize in a particular market segment. Due to the industry’s close association with medical treatments, they typically have low sensitivity to macroeconomic fluctuations. Within this industry, Abbott Laboratories, Medtronic Plc and Thermo Fisher Scientific Inc. are some of the companies with multi-billion market capitalizations in the U.S. stock markets.

Market Cap

The average market capitalization across the Medical Specialties Industry is 7.55B. The market cap for tickers in the group ranges from 27 to 3.82T. MKYSF holds the highest valuation in this group at 3.82T. The lowest valued company is FOGCF at 27.

High and low price notable news

The average weekly price growth across all stocks in the Medical Specialties Industry was -1%. For the same Industry, the average monthly price growth was -2%, and the average quarterly price growth was 16%. ODYY experienced the highest price growth at 63%, while BSGM experienced the biggest fall at -76%.

Volume

The average weekly volume growth across all stocks in the Medical Specialties Industry was -25%. For the same stocks of the Industry, the average monthly volume growth was -80% and the average quarterly volume growth was -33%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 50
P/E Growth Rating: 72
Price Growth Rating: 62
SMR Rating: 85
Profit Risk Rating: 86
Seasonality Score: 17 (-100 ... +100)
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