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Chaos On The Wall Street Open

Posted Thursday, December 6, 2018 by
Shain Vernier • 1 min read

Following a miserable U.S. overnight for equities futures, the markets are extremely active on the Wall Street open. The DJIA has begun trade more than 400 points down, with the S&P 500 losing 44. While these numbers are changing fast, they are representative of the prevailing bearish sentiment stemming from the current U.S./China trade standoff.

The week began with equities players on a high, optimistic that the U.S. and China were soon to put a formal deal in place regarding tariffs. Now, the trade deal seems to be a hazy memory. The arrest of a Huawei executive brought fear to the forefront, prompting the CME to throw circuit breakers for several equities index futures products.

Thus far, it is more of the same ― a weak cash open and investors choosing to liquidate.

Wall Street In Shambles, 1000+ Point 2-Day Loss For The DJIA

In a live market update from yesterday, I talked about how the December E-mini DOW was in position for a Thursday breakout. The directional move turned out to be a bearish one, with a perfect storm of news, market closures, and negative sentiment sending the December E-mini DOW south.

December E-mini DOW Futures (YM), Daily Chart
December E-mini DOW Futures (YM), Daily Chart

Bottom Line: The Canadian arrest of Huawei CFO Meng Wanzhou has certainly played a role in the ongoing crash, but it is not the only driver. Panic selling on Tuesday’s close surrounding President Trump’s tariffs Tweets brought negative sentiment to a crescendo. Then, with the markets being closed Wednesday, something very bad happened ― investors had time to think.

The current dynamic facing U.S. equities is not a positive one. However, things can change at the drop of a hat, possibly with a dovish Jerome Powell later today. If they do, sells from resistance just beneath 25000 may set up for Friday’s session.

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