UK FTSE 100 (.FTSE) suffers worst day since Black Monday 1987 crash as £160bn is wiped off UK shares
The FTSE 100 plunged 11 per cent on Thursday as the index suffered its worst session since the “Black Monday” stock-market crash in 1987.
Stock markets tumbled across Europe after the World Health Organisation declared on Wednesday that the coronavirus outbreak is a pandemic and Donald Trump announced a ban on travel to the US from Europe.
The rapid sell-off wiped £160bn off the FTSE 100’s value as investors and traders weighed up the economic impact of a potential new wave of travel restrictions and lockdowns.
It came as the government’s chief scientific adviser, Patrick Vallance, said the number of people infected with the coronavirus in the UK could be as high as 10,000, while the death toll in Italy rose beyond 1,000.
By lunchtime on Thursday, the FTSE 100 had dropped 7 per cent, as every share on the index went into the red. Losses continued throughout the afternoon, taking the index into “bear market” territory, meaning a fall of 20 per cent from a recent peak.
The FTSE 250 dropped 9.4 per cent, with Cineworld among the biggest fallers after it warned that it may not be able to pay its debts because of a hit to trade from the coronavirus. Finablr, which owns foreign exchange provider Travelex, plunged 50 per cent.
The Vix volatility index, known as Wall Street’s “fear gauge”, hit its highest level since the 2008 financial crisis.
The UK and Ireland are excluded from the ban, he said, as he accused the EU of failing to implement adequate restrictions on travel from China.
Several insurers have withdrawn travel insurance policies or excluded coronavirus-related claims after the World Health Organisation declared a pandemic on Wednesday.
LV= withdrew travel insurance policies, while the Post Office, Aviva and InsureandGo will no longer pay out on claims related to the virus, including cancelled trips.
The European Central Bank (ECB) launched further monetary stimulus measures on Thursday in a bid to support the eurozone economy.
It laid out plans to buy up an additional €120bn (£106bn) of bonds this year and ensure cheap loans are offered to small and medium-sized firms. Key eurozone interest rates were left unchanged, however.
“The coronavirus is proving to be a significant shock to our economies,” said Andrea Enria, the chair of the ECB’s supervisory board.
“Banks need to be in a position to continue financing households and corporates experiencing temporary difficulties.
“The supervisory measures agreed today aim to support banks in serving the economy and addressing operational challenges, including the pressure on their staff.”
As sports events were cancelled and schools closed in several nations, the UK government was accused of complacency in its sluggish response to the virus.
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 6,894.74.
The projected upper bound is: 5,603.28.
The projected lower bound is: 4,777.01.
The projected closing price is: 5,190.14.
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 22 white candles and 28 black candles for a net of 6 black candles.
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 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 2.4791. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 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 12.07. 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 6 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 -191.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 7 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 17 period(s) ago.
Rex Takasugi – TD Profile
FTSE 100 INDEX closed down -639.040 at 5,237.480. Volume was 178% above average (trending) and Bollinger Bands were 397% 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: 6,297.73 7,226.74 7,316.15
Volatility: 77 43 26
Volume: 1,619,656,960 869,267,392 760,563,520
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.
FTSE 100 INDEX is currently 28.4% 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 moderate flows of volume out of .FTSE (mildly bearish). Our trend forecasting oscillators are currently bearish on .FTSE and have had this outlook for the last 32 periods. Our momentum oscillator is currently indicating that .FTSE is currently in an oversold condition.