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DOW drawing support from 28000 after gap down, 10-year yield in free fall

DOW open sharply lower today in response to worries over global outbreak of China’s Wuhan coronavirus. It hit as low as 27995.37 and is currently down -780pts or -2.7%. Currently it’s trying to draw support from 28000 handle, which is close to 28169.52 support, as well as 38.2% retracement of 25743.46 to 29568.57 at 28107.37. We’d expect current cluster level to provide some support for a recovery. However, it all depends on how the global outbreak develops. Another decline could send DOW to 61.8% at 27204.65, in rather quick manner.

10-year yield also suffers steep fall on massive safe-have flow into treasuries. TNX hits as low as 1.359, taking out 1.429 support decisively to resume larger down trend. Next near term target will be 100% projection of 1.949 to 1.512 from 1.639 at 1.202.

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