News & Analysis

Eightcap CFD technical insights: US30 smashes through Medium Trend line after Tech sell off.

Oct 11, 2018 | CFD News

The Dow Jones plunged overnight losing 831 points. Tech selloff and continuing rate worries set off the plunge, yields have been worrying buyers for several sessions now and this may have been a cumulation of nerves set off by the exit in tech stocks. Big name tech stocks were hammered last night, Amazon lost 6.2% – Netflix lost 8.4% – Facebook and Apple also lost more than 4%. While the sell-off was sharp and deep, (largest one day decline since 8th of February) Some analysists still see the underlying fundamentals supportive of equity appreciation. Yields and rates remain a factor but are seen as possibly overblown and longer-term yields may not increase further into the future.

Comments from Jeremy Klein, chief market strategist at FBN Securities.

“Portfolio managers tend to move to the sidelines in a skittish tape out of fear of suffering from a quick and sharp pullback,” “The fundamental environment, though, remains supportive of share appreciation. I contend that the concerns of rising interest rates are largely overblown. Specifically, I do not anticipate much more of an increase in longer-dated Treasury yields,”

I agree with Jeremy, it feels like the market was looking for a reason to move lower and as we have seen this year the move lower was overblown.

Looking at the US30 daily chart, sellers blew through the medium term trend line. Depending on if we see a further extension? There are two points of support seen below at 25,160 and 24,950. The next evidence we’re looking at is the counter rally from buyers. Once the first low is set the test, hold or break will be crucial to determining if this is the start of something bigger like we last saw on the 24th April – 3rd May or a one-day event like we saw on 28th of May.

Good Trading from Eightcap.

 

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