NASDAQ Composite (.IXIC) hits bear market
U.S. equity markets cratered Thursday despite another flood of liquidity from the Federal Reserve after President Trump suspended travel from Europe for 30 days in an effort to contain the spread of the coronavirus.
Allianz chief economic adviser Mohamed El-Erian telling FOX Business he sees the environment getting “even choppier.”
The S&P 500 entered a bear market down about 8 percent while the Nasdaq did as well dropping nearly 8 percent. Trading in U.S. equity markets was halted briefly just minutes after the opening bell when the S&P fell by 7 percent.
The entry into bear market territory was the fastest on record for the S&P and Nasdaq as tracked by the Dow Jones Market Data Group.
Stocks briefly trimmed some losses, before selling resumed after the New York Federal Reserve injected $1.5 trillion of fresh liquidity into the bond market.
The decline was the worst since the Black Monday crash of 1987 when the index lost 22 percent of its value in a single day amid trade-deficit and tax worries exacerbated by computerized trading.
Earlier in the session, trading resumed after a 15-minute stoppage.
The S&P 500 and Nasdaq Composite’s historic bull markets that began on March 9, 2009 are over. The Dow’s bull-run ended on Wednesday. A bear market is defined by a 20 percent drop from the recent peak.
COVID-19 has infected 14,858 people and killed 702 in Italy, France, Spain and Germany, according to the latest update from the World Health Organization.
Looking at stocks, American Airlines, Delta Air Lines and United Airlines plunged amid worries that the European travel ban would further damage earnings already hindered by slowing demand due to the virus.
Still, “our sense is that there have already been so many transatlantic cancellations, that it may not make much of a difference,” Deutsche Bank analyst Michael Linenberg wrote in a note to clients on Thursday.
Other travel-related names, including cruise operators Carnival Corp. and Norwegian Cruise Line Holdings tanked, as did online travel-booking sites Booking Holdings and Expedia.
Stocks gaining ground were few and far between. Medical-mask maker Alpha Pro Technology soared after reporting heavy demand for its products, and Inovio Pharmaceuticals spiked after receiving a $5 million grant from the Gates Foundation for testing a device that may be used to deliver a COVID-19 vaccine.
On the earnings front, Dollar General reported better than expected top and bottom-line results and said that while it has not experienced supply-chain disruptions due to the COVID-19, there’s “no guarantee” its business would be insulated from the outbreak.
U.S. Treasurys surged, pushing the yield on the 10-year note down 18.4 basis points to 0.688 percent. Earlier this week, the benchmark yield touched a record low of 0.38 percent.
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 8,962.09.
The projected upper bound is: 7,804.11.
The projected lower bound is: 6,529.73.
The projected closing price is: 7,166.92.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 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. There have been 6 falling windows in the last 50 candles–this makes the current falling window even more bearish.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 14.5935. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 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 26.45. 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 buy 2 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 -200.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 8 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 14 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed down -750.249 at 7,201.802. Volume was 104% above average (neutral) and Bollinger Bands were 302% wider than normal.
Open High Low Close Volume___
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 8,398.47 9,144.97 8,420.98
Volatility: 91 49 29
Volume: 1,119,315,712 731,548,224 595,464,640
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.
NASDAQ COMPOSITE 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.
NASDAQ COMPOSITE is currently 14.5% 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 .IXIC (mildly bearish). Our trend forecasting oscillators are currently bearish on .IXIC and have had this outlook for the last 12 periods. Our momentum oscillator is currently indicating that .IXIC is currently in an oversold condition. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.