Draconian measures are being announced every day, both here in the U.S. and elsewhere, to deal with the spreading coronavirus epidemic. Unfortunately, many of these are damaging economic activity. Shutting down major events, restricting travel, closing schools are, at best, temporary measures to buy time. Time is needed to find new therapies, preventive measures, and stretch out the infection rate so our medical facilities can better cope.

In Asia, it took about 10 weeks to get on top of the infection rate. The advantage that the U.S. has is that the infections started much later than elsewhere, much closer to warmer weather. It is untested if warmer conditions will curtail this epidemic, but it helps with the influenza virus. Several companies have announced promising therapies, now in testing, that can go a long way to arresting the epidemic and its corollary damage.

In the meantime, the stock market is in a panic. Temporary economic damage is being extrapolated beyond the reasonable. Schools and events will not be closed and postponed indefinitely. At some point the supposed cure would be worse than the disease itself. The Bounce back can be quite powerful.

The good news is that the Bull is seeing positive divergences develop within the stock market. Money flows are diverging from price activity. Accumulation is taking place by strong players in the midst of what looks like carnage. More and more stocks are exhibiting positive price action. It is still nascent but developing. There is the strong possibility that another big push down will be met by a positive spike to the upside. We have said we did not see a V recovery, but recent action tells us we may actually get one. Stay steady my friends.

The Lonely Bull