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Dow Jones Industrial Average (.DJI) suffers biggest point-drop in history

Dow Jones Industrial Average (.DJI) suffers biggest point-drop in history

Wall Street’s main indexes plunged on Thursday for the sixth straight session, with the S&P 500 confirming its fastest correction in history as the rapid global spread of coronavirus intensified worries about economic growth.

The S&P 500 finished 12 per cent below its February 19 record close, marking its fastest correction ever in just six trading days. The previous record was nine days in early 2018, according to S&P Dow Jones Indices analyst Howard Silverblatt.

he Dow registered a record one-day points drop, which was also its fourth 1,000-point decline in history and the second this week.

All three major U.S. indexes were also on track for their steepest weekly pullback since the global financial crisis, as new infections reported around the world surpassed those in mainland China.

Governments battling the epidemic from Iran to Australia shut schools, cancelled big events and stocked up on medical supplies. In the United States, the Centres for Disease Control and Prevention late Wednesday confirmed an infection of unknown origin in California.

While selling eased for a while during the session the S&P’s losses deepened rapidly in the last hour of trading to end at a session low, registering its biggest one-day percentage loss since August 18 2011.

“The path of this scourge is unknown, therefore you can’t know the economic impact. You can roll the dice but it’s a guess,” said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

But Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC urged some caution.

“People have gone from saying this is a non-event to saying this is the end of the world. There’s room for a middle ground,” said Jankovskis, who suggested opting for defensive bets.

“The virus will spread somewhat but it doesn’t mean that it’ll make the entire world grind to a halt,” he said.

In the busiest trading session at least since July 2014, according to data from Refinitiv, 15.63 billion shares changed hands on US exchanges on Thursday compared with the average 8.67 billion for the last 20 sessions.

Declining issues outnumbered advancing ones on the NYSE by a 7.51-to-1 ratio; on Nasdaq, a 5.87-to-1 ratio favoured decliners.

The S&P 500 posted four new 52-week highs and 102 new lows; the Nasdaq Composite recorded 24 new highs and 489 new lows.

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 28,121.49.

The projected upper bound is: 26,670.87.

The projected lower bound is: 24,767.66.

The projected closing price is: 25,719.27.

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 1 white candles and 9 black candles for a net of 8 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 3 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.

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 1.9822. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 7 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 18.68. 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 26 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 -201.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 9 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 4 period(s) ago.

Rex Takasugi – TD Profile

DJ INDU AVERG closed down -1,190.949 at 25,766.641. Volume was 140% above average (neutral) and Bollinger Bands were 234% wider than normal.

Open     High      Low     Close     Volume___
26,526.00026,775.31125,752.82025,766.641 670,366,592
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 28,338.04 28,717.08 27,237.32
Volatility: 31 22 17
Volume: 375,615,776 303,530,400 270,096,832

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 5.4% 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 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 3 periods. Our momentum oscillator is currently indicating that .DJI is currently in an oversold condition.

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