The HCM-BuyLine® remains positive with some pullback, but nothing we are too concerned with. A consolidation in the markets was warranted, and needed, for markets to base and move higher. The sawtooth effect of going up and selling off is the way markets work. In fact, this recent pullback is a good place to add to positions in our opinion.
Our outlook remains unchanged, and that is a bullish sentiment on the longer-term market cycle. We view September’s weakness as part of an intermediate-term consolidation following an impressive surge that pushed most weekly momentum indicators into overbought territory. The tactical overbought condition is incrementally unwinding, which continues to show evidence of bottoming and is supportive of a low by early-mid Q4.
IHME (healthdata.org) and Youyang Gu (COVID-19projections.com) are two models which are being discussed but have completely different views. Be very careful with headlines from the news media about COVID-19; it is not about reporting the news and facts in this incredibly politicized atmosphere. The IHME model is forecasting massive death tolls starting now, and it says they could reach 2000-4000 per day. On the other hand, the Youyang Gu model is stating less than 500 deaths per day after November 1. Who is is correct? So far, Youyang Gu is by far the more accurate model at this point in time. Let us also not forget how bad the Imperial College forecast was back in February. There was a massive forecast error by the Imperial College, which publicly stated we would see a 5-10% death rate of those who had the virus. It was the Imperial College forecast that prompted global policy makers to shut down the economy, and as we know now, people under 40 were 0.01% of the COVID-19 deaths. If you want to put how incompetent the Imperial College forecast was, it would be about the same as a market analysis from a reputable firm stating that the market is going go up 300% in 90 days. I have put both web pages next to the IHME and Youyang Gu if you would like to read more about each one’s model forecast.
Texas Medical Center runs nightly reports on COVID-19 from Harris County and 9 surrounding counties (Harris County is Houston TX, which has approximately 4 million plus people.) The reports are showing dramatic drops in COVID-19 cases, hospitalizations, and deaths. This is very encouraging data since it means Labor Day and back-to-school cases are dropping, which is the direction we all would like to see.