Stocks continue to rise in the early weeks of 2020, but we may have the first significant headwind in a while that derails the rally.

The coronavirus continues to spread like wildfire the number of affected and deceased rising by the day. Although the WHO hasn't yet declared it an emergency, it certainly seems to be heading in that direction. The big question now is how deeply will it affect the global population? From an economic standpoint, the Chinese Lunar New Year was effectively put on the backburner for 2020 as travel and tourism have been ground to a halt.

Chinese stocks are already more than 6% off of their highs from just a couple of weeks ago and likely stand to fall even further. The impact in U.S. stocks, thus far, has been minimal (the S&P 500 is still only 1% off of its high) but a rapid spread of this disease worldwide could certainly sink global stocks into correction territory.

The obvious comparison here is the SARS outbreak in the early 2000s. It's difficult to say what the impact of that disease was on equities, since they were already mired in a deep post-tech bubble bear market, but it's estimated to have impacted Chinese GDP by nearly 1%.

Treasuries and defensive stocks have been the beneficiaries. Long-term T-bonds gained 2% last week, while utilities have risen 6% in the past two weeks. Gold prices were up around $10/ounce and this could be the catalyst that pushes the metal back towards $1600. While most intermediate-term momentum signals still suggest it's a sell, the U.S. dollar has been rising as the coronavirus spreads.

Here is the full scorecard for the week ahead.

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