PreMarket Prep Recap: Calm In The Eye Of The Storm

Anyone can talk about the markets when they're going straight up. Everyone is a genius in a bull market, but when the markets get volatile, that's when you need to listen to Benzinga's PreMarket Prep Show.

Benzinga · 01/27/2020 18:29

Anyone can talk about the markets when they're going straight up. Everyone is a genius in a bull market, but when the markets get volatile, that's when you need to listen to Benzinga's PreMarket Prep Show. On today's show, we surveyed the carnage from the pre-market trading and discussed its implications for the upcoming session.

Triple Whammy: Coronavirus, US Embassy Bombed, Impeachment Proceedings Heat Up

On any individual day, any of the above three could have been the main topic for the show. The continued concern over the outbreak of the coronavirus dominated the content of today's show.

Of course, the pre-market declines are alarming, but from a longer-term perspective it may just be a blip on the radar for the raging bull market. The hosts of the show noted the incredible run the market had in 2019 and the early gains in January on top of that.

In other words, even without the surfacing of the recent geopolitical concerns, the markets were due for a breather. In fact, a retreat from the highs and some consolidation may just be what the markets need to mount another leg higher.

From a shorter-term trading perspective, traders were encouraged to be aware of the pre-market lows in the issues of interest to determine whether there would be follow-through on the downside or a rebound and the opposite for stocks rallying off the crisis.

The best example of this was in the March S&P 500 index futures, which bottomed at 3235.75 in pre-market trading. Although it did breach that level, falling to 3,233 briefly, it quickly rebounded to recoup some of its overnight losses.

How To Read The Tea Leaves From Pre-Market Action To Trade Coronavirus Stocks

Several issues are moving in either direction based on the outbreak of the coronavirus. Obviously, travel and tourism issues, including gaming stocks are taking it on the chin, while issues related to prevention or a potential cure for the virus are prospering.

The most talked about issue on our broadcast has been hazmat suit maker Lakeland Industries (NASDAQ: LAKE). The reason being this issue catapulted in a two-week span from $8.50 to $29.55 during the Ebola scare in the fall of 2014 and quickly returned to its point of origin after the fears subsided.

The author of this article made $15.40 as the main level for the upcoming session. The reason being, that was the high from last Tuesday and was followed by a quick retreat to $12.01 on Wednesday. It rallied to end the week at $13.74.

The pre-market high of $16.69 was noted as a juicy target on the upside, but even if that level wasn't reached, a close above last week's high ($15.40) may confirm another leg higher in the issue. As of 11:00 a.m. EST, the issue has easily breached the aforementioned level, but has come up shy of the pre-market high as $16 stands as the high for the session.

If trading this issue, pay close attention to headlines regarding it, as the sole catalyst for the entire rally has been the outbreak of the coronavirus.

Two Guests On Monday's Show

Early in the broadcast, Alan Brochstein, author of the 420 Investor Newsletter commented on the recent price action of issues in the cannabis sector.

Midway through the broadcast, Michael Sonneshien, Director of Business Developments at Grayscale Investments joined us to talk about the prospects for Bitcoin and its related product Grayscale Bitcoin Trust (OTC: GBTC) in 2020.

At 8:35 a.m. EST on Tuesday, Nic Chahine, the author of Create Income With Options Spreads will be our guest. He will survey the recent price action in the markets and the prospects for continued downside or resumption of the long-term bullish