S&P 500
Dow Jones CFDs attempted to rebound as investors started to question the length of the current shutdown. The index rose from an intraday low of $21,025 to a high of $21,930.
Investors have three main concerns. First, they are worried that the ongoing lockdown could continue for an unprecedented amount of time. This is after Donald Trump extended the duration of his social distancing policy to the end of April. Previously, he was talking about reopening the economy by Easter holiday.
Second, investors are concerned that the $2.2 trillion stimulus package passed by the government will not be enough. This is because the damage caused by the disease could be worth trillions of dollars more. The challenge is that an additional stimulus could expose the US to a lot of debt.
Finally, there are concerns about the energy sector after the price of crude oil dropped to historic lows. As I wrote earlier today, the price of WTI dropped to below $20 per barrel while Brent is nearing $25. While low crude oil price is positive for the Dow, these levels are dangerous because many energy companies are highly levered. In fact, the stock price of Chevron and Exxon Mobil have declined by more than 2% in the premarket.
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The Dow Jones CFDs recovered from the significant declines earlier on. The index is trading at $21,530, which is slightly below last week’s high of $22,644. On the hourly chart, we can see that the index is slightly below the 78.6% Fibonacci Retracement level. We also see that it has just completed the third phase of a corrective wave of Elliot Wave. Therefore, I expect the price to bounce back and possibly retest last week’s high of $22,644.