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Dow Jones Industrial Average (.DJI) futures rise 150 points in volatile trading as Wall Street grapples with coronavirus fears

Dow Jones Industrial Average (.DJI) futures rise 150 points in volatile trading as Wall Street grapples with coronavirus fears

Dow futures rose more than 100 points late Sunday, erasing earlier losses, in a sign more wild swings in markets are likely this week amid reports the coronavirus is spreading in the U.S. and globally.

The broader Standard & Poor’s 500 stock index futures were up 0.2%.

The Dow was down as much as 500 points earlier in the day. Investors are reacting to the spread of the outbreak but also trying to assess if last week’s historic sell-off may have overstated the epidemic’s effects on the economy and earnings.

“With global markets historically oversold, a big bounce could happen if we can get any type of good news,” said Ryan Detrick, senior market strategist at LPL Ffinancial.

Last week, the Dow Jones industrial average tumbled more than 3,500 points, or 12%, its worst week since the 2008 financial crisis. The S&P 500 index slid 11.5%.

In the U.S., officials have identified a handful of cases through community transmission, or a source not directly linked to known cases. That means the disease could spread far more rapidly than the nation’s 72 confirmed cases indicate, taking a bigger toll on commerce and the economy. The first death in the U.S. was announced Saturday. And the Trump administration broadened its travel restrictions for Americans over the weekend.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 27,924.32.

The projected upper bound is: 26,311.03.

The projected lower bound is: 24,394.63.

The projected closing price is: 25,352.83.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 4 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern even more bearish.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 8.4309. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 8 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 17.26. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 27 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -186.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 10 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 5 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed down -357.281 at 25,409.359. Volume was 222% above average (trending) and Bollinger Bands were 297% wider than normal.

Open     High      Low     Close     Volume___
25,270.83025,494.24024,681.01025,409.359 922,679,616
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 27,936.64 28,660.55 27,236.71
Volatility: 31 22 17
Volume: 438,447,424 316,248,640 273,252,352

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

DJ INDU AVERG gapped down today (bearish) on heavy volume. Possibility of a Breakaway Gap which usually signifies the beginning of a major market move. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
DJ INDU AVERG is currently 6.7% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume out of .DJI (mildly bearish). Our trend forecasting oscillators are currently bearish on .DJI and have had this outlook for the last 4 periods. Our momentum oscillator is currently indicating that .DJI is currently in an oversold condition.

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