Dow Jones – [ Covid-19 Hits Hard, 7 Days Drop Wiping out 7 months of gains, What’s our plan now? ]

2nd March, 2020, 8:39 AM

Dow Jones – [ Covid-19 Hits Hard, 7 Days Drop Wiping out 7 months of gains, What’s our plan now? ]

Chart Source: Poems2.0

Fear, anxiety, panic gripped the markets last week as traders and investor ran for the exit door.

It was the fiercest and fastest sell down since the 2008 financial crisis. 1000 points drop almost day after day which caused even the gutsiest of traders to flee. The week was just marked with panic selling just as Us markets made new high. Any rebound was met with even more selling and the market succumb nosedive of about 14% for the week.

South korea had the biggest jump of number of infected with over 3700 people infected in just over a week. This caused a huge alarm and panic as South Korea scrambled to contain the outbreak mostly in Daegu.

Italy also reported a surge in cases bringing the total number of cases to over 1100 the second largest infected outside China.

Iran also saw an increase in cases and what was puzzling was that Indonesia has so far not reported any cases. Has market priced in a potential case in Indonesia? US also warned of community spread in its country.

WHO ( World Health Organization) also raised its risk assessment to the highest level warning countries to get ready and be prepared!

All these mixtures of bad news made a perfect storm and reason for selling. And Selling it was!

The 10 year Treasury yield which is a key indicator in global finance also hit a record low on Friday , another sign that investors are fleeing equities for the safety of bonds.  The Cboe Volatility Index also known the VIX surged to its highest level since the Great Recession, warning  that there might be more volatility ahead.

Dow Jones went into correction territory just within the week plunging close to 5000 points from high. Selling was the order of the day even though Trump tried to calm the markets. We all know how bad this week was and so lets  take a deep breath and look ahead to the week. We have drew the chart for Dow Jones with the trendline support and resistance on the chart. Here’s our simplified game plan for the week.

  1. Looking for a rebound (Daring traders might look to long on reboud)
  2. If the rebound is strong and could reach our resistance we might consider to go short.
  3. Market could test the low or even break friday’s low after the rebound.

Stay nimble and watch the charts and news as things could escalate any moment or will Fed come in to rescue the markets?

It’s been a very tough week for all and if you’re feeling depressed and defeated by the market its perfectly understandable.

We’re always here just a message away if you need a second opinion.

 

Yours

Humbly

Kelwin&Roy