Welcome and thank you for joining me.

My name is Peter Hanks, junior analyst for daily effects dot com.

Today we're going to be going through some equity index analysis.

This will probably be one of the more interesting ah webinars we've had in the past few months just because there's so many unknowns and the S and P 500 has dropped about 8% in the last four days.

We are up around 1% today, but ah, I would say the recovery is tenuous at best.

So let's dive right in beginning with a quick risk disclaimer.

And then we'll look at some data and talk about some of the unknowns that we still to face a Vernon.

Hey, Patrick, Thanks for joining.

It has been quite the week, so on that.

Here's a chart.

Four hours of the S and P 500 appear around 3400 nearly ah, on February 18th just establishing all time highs.

Virus fears were still very much nothing at this point.

Um, it was still spreading.

Everyone knew it was spreading.

We saw breakdowns and crude oil, copper, The Australian dollar risk and growth sensitive assets were generally selling off.

And we actually talked about that just last week the same time and ah, I outlined my bearish cases and essentially said, um, the reason we're going higher is maybe the central banks, maybe Fauria or just a detachment from fundamentals.

But eventually the chickens have to come home to roost and that they did this week, starting Monday, with some staggering gaps.

Let me read off the stats for you here from another slide.

I have eso for the NASDAQ, it was the largest gapped lower since August 24th 2015 for the S and P 500.

It was the worst opening gap since August 1981.

And for the Dow Jones, it was the worst since 1991.

So we have some gaps in there that haven't been seen in 30 almost 40 years.

Um, which is really remarkable just to just goes to show how quickly risk appetite can really unwind.

And these months of gains going back to really October, December now ah, just gradually melting higher were erased in just four sessions, and that is why stops are so important in your trading strategy.

It's also why it's very important just to keep an eye on the fundamentals And really ask yourself what is fueling all of this.

And, um, it didn't seem like much was feeling it.

So now let's look forward again and try to ascertain if this is all we're going to see or if further declines Aaron store.

Ah, starting off with a chart here.

This is not my chart.

This is from Jon Huntsman, and the data is from Johns Hopkins.

Ah, he is a pretty trusted source, but it is not.

My dad is.

So, um, I haven't been able Thio check it myself.

But just looking at him very briefly.

Ah, talking about the virus here in the blue line, we have the daily percentage increase in total reported cases.

So this line showing that China is gradually seeing a slowdown in the spread take that with a grain of salt because their numbers are so, um, unverifiable.

Guess for lack of a better term and ah, and then in the red line, we have other locations.

So the slowdown in China is not being met in other countries as we have some pretty serious outbreaks now in Italy, South Korea Japan.

Um, Italy is closing off some more borders this morning, and I think there are where there was the first confirmed case in Brazil late last night, and now there are suspected 20 to 25 people that might test positive for the virus.

So it is certainly not finished spreading.

And whether that was what sparked the sell off or whether it was just investors finally realizing that this is materially going to impact their supply chains, we don't know for sure.

But if we do start to get a spread into the United States into Germany into these other developed economies, ah, which the CDC said earlier this week was completely possible and actually likely.

They also said, Ah, pandemic is likely.

So there is definitely some cause for concern this virus is going to continue to spread and not only will that take a toll on lives, but from an economic standpoint, it's almost going to leave no supply chain, um, un disrupted so that could be very concerning.

And it could really grind everything to a halt.

We already looked at this chart last week, just the D.

H l Global trade barometer showing the slowdown in trade.

This was pre virus.

I'm gonna keep an eye out for updates on this.

They are a little bit delayed.

But, um, once we do get data that has had the time to be recorded during the viral outbreak, I suspect it's going to be pretty terrible.

And, um, that might come to bite us down the line.

If everything has been baked into the current price because it's incredibly difficult to it's, it's just there are so few precedents.

Really.

Um, I mean, you have SARS 20 years ago, And other than that, global viral outbreaks are just so few and far between, especially during the time of developing markets and exchanges and things like that.

So with the trade war and issues like that, you have the amount of goods going between the nations.

You know, the type of goods you have, the percentage that they're going to be taxed at.

And you can kind of back into what that is going to do to prices, what it's going to do to economic growth.

But with something like this Corona virus, there's just No, you don't have that certainty in the information, so that is going to continue to provide uncertainty over the markets.

And if there's one thing investors hate most, it is uncertainty.

Combine that with the election and Bernie Sanders looking to take the lead on the Democratic side.

Ah, that could create some further wobbles there, as many investors believe, his policies will not be very business friendly.

Here's a chart we didn't take a look at last week.

This is from Bloomberg and the CPB World Trade Monitor.

It's showing that for the first time in a decade, trade declined in 2019.

I think it's safe to say that was entirely due to the U.

S China trade war in some other bubbling trade wars in there if it declined in 2019 and 2020 started off with an immediate outbreak and some hits to you.

Various supply chains, I suspect, is going to be, ah, quite poor in here to come as well.

Taking a look at some domestic data.

This is also going to be very important to keep an eye on in the weeks to come.

I assume manufacturing and Isom service is I.

Some service is actually slipping down into contractionary territory.

Manufacturing was able to pull out a little bit, but it's still not off the cliff edge.

And much of this data, I would say probably half in the month of January was pre virus.

And that was really before it started to gain momentum and, um, leak into other countries.

So we're looking at, uh, a string of pretty poor data coming out here now, since there is so much unknown on the fundamental side, I think taking a look at the technical side is probably the best thing we can do here because trying to back into these values is just not ah, really verifiable.

So S and P 500 here.

I had an article out on this yesterday outlining the 200 days Simple moving average.

These people from I G always like to go on the air when I do.

Ah and an ascending trendline bouncing off the tops of these various highs and lows here in November and December.

I'll line that around 30 92 give or take a few points.

And this morning pre market, we got about as perfect of a touch as you could ask for.

Um, just coming down to that line 30 92 30 95.

Somewhere in there very quickly got a pretty strong bounce.

And back above this trend line that was marked from the December lows and 2018.

So we thankfully, have to pretty strong levels of support here.

It seems like this kind of around 31 30 31 35 in the days and hours to come and then 30 92 which is unbroken, unlike this trend line.

Um, so we do have some pretty robust assistance there.

And if selling does pick up again, that's when we'll look to the flat 3000 mark psychological level.

Very important.

And that would equate to another four ish percent drop four and 1/2 percent drop from where we are now.

But as we've seen, we shed 6% in just two days.

So, uh, 4% at this stage is really not too much to ask.

Looking at the NASDAQ, we really quickly blew through Mrs Sending trendline and the 200 period moving average on the floor.

Our try here, it did provide a little bit of assistance, but the wheels just came off the bus and, um, the NASDAQ capped 4% lower on Monday.

So, um was a hundreds of points in a single tick is really effective at taking out support, which left us kind of grasping there on Tuesday.

I didn't have anything in this area, and it doesn't look like there was ah, really strong level in here.

Um, maybe somewhere around these lows, you could argue.

I think that'd be fair.

Perhaps it might look better on an hourly chart, but that's a little too short of a time frame for our weekly updates.

Yeah, so you could draw some parallels from some of these lows in here.

But since we only meet once a week, let's keep to the four hour in the daily.

If the recovery continues 9200 this little bounce here and then this subsequent area of resistance are going to be the levels to watch.

I don't think we'll immediately rebound from this.

I don't think we're out of the woods yet, because of of all that uncertainty that I mentioned.

So I'm going to continue to outline support in my pieces.

And I think this level down here around 8787 10 it is pretty important because we did get a little bit of a bottom there.

So that is a swing low now.

So if we bleed lower again and we establish another lower low Ah, that's pretty concerning development.

From the technical perspective, what we're really looking for here Yes, bearishness resumes again is a hold around 8280 to 70 82 80.

Really, it's kind of hard to identify because it's they're two conflicting or to, ah, converging bands.

So each one of them has a range.

And since they're converging, there's kind of a range within that range s so it's rather messy, but they are pretty long standing levels, and that should really provide some assistance.

If we break beneath that, it might get real ugly.

Moving over to the Dow Jones for our chart, we actually let me pull out to the daily.

We did get a bounce or a a little swing low off this trend line this morning.

This is drawn directly off the January 2018 highs, and it provided some indecision in the past as well.

So April 2019 and then July 2019 doesn't really know inside with the exact tops like this Red Line does.

But ah, I think it's worthy of note.

And then the reaction we got off of it this morning, I think, verifies that.

So that's coming in right around 26 700.

Don't be a good clean level to put it at 26 700.

Um, that's the level to keep above for the rest of the week here.

If we break beneath, that may allow us to test this ascending band, which really marks the lows dating back for quite some time back to February 2018.

We did get a little bit of a breach there in late 2018 but other than that, it's held pretty consistently.

So if the longer term up trend is to continue, that will be critical in doing so.

Because this move down here in December was right on the edge of bear market territory, that was around 18% decline pending on the index.

As it stands today, we're probably I don't have the numbers exactly in front of me, but I would say we're around a 7% move from all time highs.

Technically speaking, the exact definitions 10% correction 10% negative move is correction and a 20% negative move off.

A recent high is a bear market.

So crude oil on the edge of a bear market stocks.

We're on the edge of a correction when they were down 8% from all time highs.

But it looks like we're getting a little bit of points here this morning looking to the Russell.

Unfortunately for the wrestle, it fell back into this really, really sticky range that it was trapped in for so long from January 2018 broke out for a little bit.

Well, Beth fell back beneath and we experienced very similar price action this time around.

So if we do get any more bullishness, it becomes a question of will this resistance be able to stall the move all together because we do have the 200 day moving average right at the current price right now 15 86 and without ah, an improvement on the fundamental side of things, asking for just ah surged through this resistance which is held for so long, is a pretty tall task, I would say.

But Encouragingly, we do have some along lower wicks here, so moving onto the decks, you'll notice the Dax has not had quite the same degree of bullishness this morning that the U.

S embassies have had.

Yeah, which makes a little bit of sense because the Dax is kind of lagged us anyway.

So when risk appetite picks up, its not too surprising that the Dax lags a little bit behind.

It's just not on as stable of foundation as the U.

S.

Is right now.

So it too has moved down to the 200 day moving average.

We also tested this horizontal line here around 12 4 78 12 4 80 We hop down to a four hour chart, can see just how much just how many technical levels we fell through.

So this is sending trend line here, which helped us so many times in the past months.

Um, and then again, this line here and around 12 8 85 can see various swing lows.

So this move in the aggressiveness with which it took place very surprising, um, and really caught a lot of people off guard, I think.

And that's why so many of these technical levels were able to fall to the wayside.

So going forward in the week ahead, Bulls they're gonna wanna hold above this.

12 4 60 area.

12 4 65 Tree bounced off earlier today.

Subsequently, this is sending trendline.

Call it 12 1 75 and then it's an attempted rebound.

Or if bulls attempt a rebound, 12 8 85 will be early resistance.

It didn't really do much for us on the way down, but I do think on the way up it will provide Ah, a little bit of indecision and a little bit of a hurdle be on that another level of resistance at 13 200.

So in the weeks pass, we talked about all the support that we could enjoy on the way down.

Unfortunately, it was just taken out in one fell swoop, but those levels still exist.

So now on the way back up, we're gonna have to grapple with them again.

And that could kind of slow us down in our ascent, especially if the fundamental side remains so damaging or so damaged.