Pre-Market Analysis And Chartbook: Carnage Spreads as Stocks Extend Losses

Thursday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,779 0.25%
DAX 30 11,643 -0.60%
WTI Crude Oil 72.2 -0.58%
GOLD 1,213 1.28%
Bitcoin 6,190 -5.03%
EUR/USD 1.1578 0.51%

10 years after the Lehman-Crash, we have another chaotic October at hand in stocks, as equity markets had their worst 24 hours since the February mini-crash, with the Nasdaq falling the most in a day since 2011. Yesterday’s panicky move on Wall Street caused a deep selloff in the major Asian markets as well, and Europe is also a sea of red, with several benchmarks falling to multi-month lows and with the DAX plunging to its lowest level since early-2017.

Shanghai Composite Index CFD, 4-Hour Chart Analysis

The main Asian markets all got hammered lower today with some of the benchmarks plunging the most since the Brexit vote, and with more than 3% declines across the board. The Shanghai Composite violated its recent bear market low and fell to a new more than 4-year low amid the still strong trade-war fears and the global selloff.

While Treasury yields are well off their lows, and the jump in yields triggered the correction, the main stock benchmarks are hovering near their lows, without a meaningful bounce, so far today. That said, in these market conditions wild swings will likely be the norm in both directions, so day-traders should choose their position sizes carefully.

DAX 30 Index CFD, 4-Hour Chart Analysis

As we mentioned the main German stock index fell to a 21-month low today, taking out its late-March low and breaching the 11,500 level in the process. The benchmark is now clearly in oversold territory, but barring a strong reversal above 12,000 soon, a major head-and-shoulders pattern would be confirmed on the monthly chart, with a target around the 10,000 level.

Yen Pushed Higher by Safe-Haven Buyers

S&P 500 Futures, 4-Hour Chart Analysis

The main US indices are set to open moderately below yesterday’s closing levels, and as correlations skyrocketed strong divergences of the past weeks eased, with no meaningful outliers today. The new volatility-regime that we have been tracking since last week means that even the indices will likely have intraday swings of 1% or more, as it was the case during the February Volatility-Apocalypse.

The S&P 500 plunged clearly below the January low, and back to the 2750 level that represented the mid-point of the multi-month consolidation period that developed after the mini-crash. the modest miss in the CPI index might just be what the doctor ordered for bulls, and it could be enough to push the indices into positive territory near the market open.

USD/JPY, 4-Hour Chart Analysis

The Japanese Yen has been the biggest beneficiary of yesterday’s selloff among the key safe-haven assets, as gold is still stuck in a broader downtrend and as the Swiss Franc is still pushed lower by the easy monetary policies of the SNB. The Yen hit an almost 1-month high against the Dollar, an almost 1-month low in the USD/JPY chart above, and although pair is still in a longer-term uptrend, a durable risk-off shift could continue to push the Japanese currency higher.

ChartBook

Major Stock Indices

Nasdaq 100 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

VIX (US Volatility Index), 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

EUR/USD, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.

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