NASDAQ Composite (.IXIC) tumbles on virus, growth worries
Wall Street’s major indices tumbled more than 1.5 per cent on Friday, sealing its worst week in six months, as the spreading coronavirus outbreak coupled with sluggish US economic data and a mixed batch of corporate earnings, fuelled concerns about global growth.
After suffering its biggest one-day percentage decline since October 2, the S&P 500 is down more than 3 per cent from its closing high hit earlier in January, as businesses struggle with supply problems from the coronavirus epidemic that has killed 213 people in China and been declared a global emergency.
The Center for Disease Control and Prevention (CDC) said it had issued a quarantine order for all Americans repatriated from China to an air base in California.
However, stocks pared losses late in the session as the agency director, Robert Redfield, said the risk to the US public is low.
Delta Air Lines lost 2.38 per cent and American Airlines fell 3.17 per cent after the companies said they would suspend all flights to mainland China.
Economists fear the coronavirus could have a bigger impact than Severe Acute Respiratory Syndrome (SARS), which killed about 800 people between 2002 and 2003 at an estimated cost of $US33 billion to the global economy, since China’s share of the world economy is now far greater.
US data showing consumer spending rose steadily in December while wage gains indicated moderate growth in consumption amid contracting business investment added to the growth concerns.
Additionally, a report on manufacturing in the Midwest hit a four-year low for January.
Amazon.com was a bright spot, surging 7.38 per cent on better-than-expected results for the holiday-quarter that pushed it back into the $US1 trillion market capitalisation club.
Gains in Amazon helped the consumer discretionary index rise 0.82 per cent, the only sector on the plus side. Energy was by far the worst performer, tumbling 3.18 per cent.
Oil majors Exxon Mobil and Chevron were the primary drags on the sector as each dropped more than 4 per cent after disappointing results.
The Dow Jones Industrial Average fell 603.41 points, or 2.09 per cent, to 28,256.03, the S&P 500 lost 58.14 points, or 1.77 per cent, to 3,225.52 and the Nasdaq Composite dropped 148.00 points, or 1.59 per cent, to 9,150.94.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 9,349.81.
The projected lower bound is: 8,976.10.
The projected closing price is: 9,162.96.
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 5 white candles and 5 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
A dark cloud occurred (which indicates that prices moved up strongly on the previous bar, opened higher, but then closed significantly lower). This implies weakness as the momentum appears to be shifting from the bulls to the bears. Note that the lower the close of the black candle (relative to the white candle), the more bearish the dark cloud pattern.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with NASDAQ COMPOSITE), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.
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 47.6218. This is not an overbought or oversold reading. The last signal was a sell 6 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 49.95. 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 5 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 -97. This is not a topping or bottoming area. The last signal was a sell 6 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 5 period(s) ago.
Rex Takasugi – TD Profile
NASDAQ COMPOSITE closed down -147.998 at 9,150.936. Volume was 26% above average (neutral) and Bollinger Bands were 5% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 9,299.49 8,940.51 8,258.57
Volatility: 18 13 18
Volume: 620,778,112 589,548,928 556,405,312
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 is currently 10.8% above its 200-period moving average and is in an upward 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 .IXIC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .IXIC and have had this outlook for the last 72 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.