E Volatility Gone Viral: Time To Trade

The market was expected to be significantly volatile in 2020 and that was before the US-Iran conflict and the ravaging coronavirus, which as of Monday had wiped out more than $400 billion worth of china's stock market. The deadly outbreak in Asia has deeply affected global stocks. Even in the US, were it not for an upbeat earnings season, the situation could have been worse.

Technical overview

The S&P 500 Index (SPX) is down more than 3% since the news of the Coronavirus broke a few weeks ago. The US top 500 Index dropped from an all-time high of about 3,335 points on Jan 22, to bottom at about 3,214 last Friday. 

This week, it has recouped some of those losses to settle at 3,298 points at the time of writing, after China announced a stimulus package to be injected in the economy to try to mitigate the impact of coronavirus. As showcased below using one of the most popular trading apps for stocks and indices, the S&P 500 Index appears to be experiencing high levels of volatility.

Based on the Fibonacci retracements off the all-time highs, the US 500 Index is now pegged between 61.80% and 76.40% Fib levels, which makes them ideal targets for short-term trading at 3,291 and 3,308, respectively. More opportunities are also available down below, with just a few higher.

In Europe, both the FTSE Euronext 100 and the German DAX 30 have followed a similar trajectory. They plunged during the final week of January, but have since rebounded since the start of the month. 

On the other hand, the Shanghai Composite Index (SSE) has plunged from a multi-month high of 3,124 to trade at 2,685 while Japan’s Nikkei 225 has dropped from 24,115 to a 4-month low of 22,971 points.

Fundamentals overview

The coronavirus outbreak has come hot on the heels of the US-Iran conflict at the Persian Gulf, which temporarily disrupted markets. However, the market quickly overcame the instability caused by the conflict after the two countries cooled off the attacks. The impact caused by the coronavirus fears appears far deadlier as it continues to spread across the globe. This does not sit well with investors.

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Disclosure: The material appearing on this article is based on data and information from sources I believe to be accurate and reliable. However, the material is not guaranteed as to accuracy nor does ...

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