HCM-BUYLINE® REMAINS POSITIVE DESPITE MARKET VOLATILITY

September 09, 2020
HCM-BuyLine®


The HCM-BuyLine® is still strong even with the current pullback/selloff. The pullback we are witnessing should not surprise anyone. After days and even weeks of gains, a period of consolidation is warranted. Weekly internal momentum oscillators are on track for an early-mid Q4 upside reacceleration. The volatility so far in September, while unnerving, is a healthy development in our view, that needs to develop for the longer-term market cycle to progress. We view the pullback in technology as tactical in duration, measured in weeks, and believe it is premature to conclude a long-term cycle peak has developed. Tactically, tracking the percentage of stocks with rising weekly momentum, it is on track to bottom by mid-late Q4, consistent with a seasonal rebound in Q4. The market was clearly overbought, but after the pullback is now oversold on a short-term basis.


COVID-19 UPDATE:

Overall, this was a very good past few days for COVID-19 data. The new daily COVID-19 cases on Monday fell to 27,178, the first time below the 30,000 figure in 3 months, and on the heels of many counties showing widespread improvement. 44% of U.S. counties, based on 7-day average, now see daily cases 75% off their highs.  This is the highest reading since the pandemic started and higher than the 42% last week.  

Phoenix Houston_COVID Cases By County

Houston is seeing a large drop in hospitalizations, and this is very encouraging news considering schools are back to being open. You can also see from The Texas Medical Center that we are back in the green, which is very good news showing a low spread of the virus. 


TMC Hospital Test Positivity Rate

TMC Daily New Hospitalizations

Of course, Labor Day weekend will be monitored closely over the next few days to see if there is a spike.  With back to school and many social gatherings, policymakers worry about a new surge of cases.  But if we see continued case trend improvements over the next two weeks, this would be a very positive surprise. The future is uncertain, and we have been surprised by the direction of trends, so we will wait and see. 

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