USTEC (Nasdaq 100) Symmetry Swing Support
Global risk appetite tumbled further yesterday amid the weight of the Covid-19 spread and the oil price shock, with S&P500 triggering circuit breakers for the first time since 1997 and finally closing down 7.6%. The market rout prompted the Fed to boost its repo operations from $ 100b to $ 150b to head off any liquidity squeezes, but it was the prospect of further US fiscal stimulus, especially the talk of a payroll tax cut, that may buy Asian markets some temporary relief from the selling pressures today. Note that the WHO warned that the pandemic threat is “very real” and Italian PM Conte is extending travel restrictions throughout the country. VIX spiked to 54.46 overnight (highest since January 2009), while the UST bond market had another flash rally with the 30-year bond yield plunging 59bps to a record 0.6999% and the 10-year bond yield down to 0.3228% before closing higher for the session, and crude oil prices whipsawed wildly in its worst session since 1991 before ending around $ 31.13 (WTI) and $ 34.36 (Brent).
Following sharp falls yesterday, global equity markets stabilised overnight in Asia. In Japan, the TOPIX index was up around 1.5% on reports that they government was due to announce a second round of countermeasures to the covid19 virus. Similarly, US President Trump is reportedly readying a payroll tax cut for workers and other relief measures for corporates affected by the outbreak.
From a technical & trading perspective the USTEC (Nasdaq 100) has tested symmetry swing support replicating the scale of declines witnessed in late 2018 the 7800 area also represents the 50% Fibonacci retracement form the late 2018 low and the yearly Pivot Point. Bids have merged at this level and now nascent bulls will be watching for a key reversal pattern to suggest that we may witness a meaningful correction to the recent declines, initially targeting a retest of the monthly pivot point at 8800, a breach of the overnight lows on a closing basis would negate the corrective thesis opening a move to test the equidistant swing objective sighted at 7386
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