Wall street experienced massive selloff overnight, on double whammy of global coronavirus pandemic and oil price war. DOW declined -2013.76 pts or -7.79%, S&P lost -7.60%, NASDAQ dropped -7.29%. 10-year yield hit another record low at 0.398 before closing at 0.499, down -0.207. Fed fund futures are now pricing in 100% chance of -75bps rate cut to 0.25-0.50% at March 18 meeting.
President Donald Trump said at the White House that he plans to announce “very dramatic” actions to support the economy on Tuesday. The measures will include payroll tax cut and “very substantial relief” for industries hit by the coronavirus outbreak.
DOW’s steep fall from 29568.57 resumed earlier than we expected, by breaking 24681.01 temporary low. Further decline should be seen to 100% projection of 29568.57 to 24681.01 from 21702.34 at 22214.78 in the near term. The projection sits inside an important long term support range, with 55 month EMA at 22632.99, and 38.2% retracement of 6469.95 to 29568.57 at 20744.89. We’d expect strong support from there to end the current leg of selloff, and bring sustainable rebound.
