U.S. stocks pulled back from record levels Tuesday, as concerns over the spread of the dangerous virus from China seemed to rattle investors.
According to the latest reports a leading Chinese health official stoked fears that the disease, which has spread between humans and claimed six lives already, could quickly cross borders as millions of Chinese travel for the Lunar New Year.
‘The market is not ready for this new development.’
Still, the damage to the Dow DJIA, -0.63% and S&P SPX, -0.27% has been minimal to this point, and that’s something that Kevin Muir, veteran trader and author of the popular Macro Tourist blog is worried about.
“I don’t like trafficking in end-of-the-world predictions,” he wrote. “Yet there is sometimes a potentially worrisome situation that the market seems to ignore. Or at least ignores for a while. Then in a sickening whoosh, the worse case scenario gets discounted.”
This could be one of those times.
“I sure hope I am wrong about this next development,” Muir said. “Nothing will make me happier than to be proven the little-boy-who-cried-wolf.”
His point is to at least put investors on high alert so they won’t get caught flat-footed by what could look like a black swan in retrospect.
”The market is not ready for this new development,” he said. “Today was the first day the market showed even the slightest bit of concern. And my guess is that today will prove the start of a growing worry, not the other way round.”
Muir pointed to these two Twitter TWTR, -0.28% accounts to keep on top of further developments.
“This is a case where the market has underappreciated the possibility of this situation getting worse,” Muir wrote. “Let’s just all remember to be careful out there.”
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