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Dow Jones Industrial Average (.DJI) plunges 1,000+ points on mounting fears over coronavirus spreading

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Dow Jones Industrial Average (.DJI) plunges 1,000+ points on mounting fears over coronavirus spreading

US markets continue to plunge on reports of increasing numbers of cases of the сoronavirus being identified outside China.

The Dow Jones dropped by more than 1,000 points (3.7 percent) on Monday, while the S&P 500 dropped 3.5 percent and the Nasdaq index lost as much as four percent.

Investors are increasingly worried about the economic impact of the сoronavirus outbreak, as more countries took measures to curb its spread over the weekend.

South Korea reported 161 new cases of the infection on Monday, while Italy and Iran also said they had seen a jump in the number of cases.

Travel stocks, along with technology stocks, were trading lower on Monday, with Apple, Facebook, Microsoft, Amazon and Alphabet taking a $250 billion loss cumulatively as part of the broader plunge. Airline stocks, meanwhile, also saw a significant drop, with both Delta and American down seven percent.

Drugmakers – such as Inovio Pharmaceuticals and Novavax, which both jumped by as much as 18 percent in pre-market trading – saw big gains as Big Pharma firms attempt to develop vaccines for the virus.

By percentage, the precipitous drop was the largest seen for the S&P 500 since October 2018, and the biggest since February 2018 for the Dow, with both indices giving up all of the gains made so far in 2020, as fears of the fast-moving coronavirus outbreak continue to wreak havoc on global markets.

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 28,487.26.

The projected upper bound is: 28,695.45.

The projected lower bound is: 27,229.32.

The projected closing price is: 27,962.38.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white 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. The two candles preceding the falling window were black, which makes this pattern even more bearish.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 15.4537. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 4 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 33.45. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 23 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 -317.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 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 1 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed down -1,031.609 at 27,960.801. Volume was 71% above average (neutral) and Bollinger Bands were 52% wider than normal.

Open     High      Low     Close     Volume___
28,402.93028,402.93027,912.43927,960.801 458,714,528
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 29,167.94 28,804.54 27,223.78
Volatility: 23 16 16
Volume: 294,379,008 285,391,296 266,743,680

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 normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
DJ INDU AVERG is currently 2.7% above 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 volume flowing into and out of .DJI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .DJI and have had this outlook for the last 0 periods.

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