For the third-straight Friday, COVID-19 fears are dominating sentiment toward U.S. stocks. At the midpoint of the Wall Street trading session, the DJIA DOW (-495), S&P 500 SPX (-75), and NASDAQ (-240) are deep in the red. Despite a robust U.S. Non-Farm Payrolls (NFP) report, equities continue their decline.

On a positive note, the American labor market is performing well. February’s jobs numbers showed a marked improvement over January, although most analysts expect these figures to drop dramatically in March. Here is a quick look at this morning’s highlights:

Event                                                             Actual         Projected      Previous

Non-Farm Payrolls (Feb.)                             273K              175K                273K

Unemployment Rate (Feb.)                           3.5%               3.6%               3.6%

Average Hourly Earnings (MoM, Feb.)         3.0%              3.0%                3.1%

It’s tough to overstate just how strong this collection of figures really is. Given the COVID-19 outbreak and the impact on leisure travel and commerce, seeing such jobs growth is a surprise. However, this may be the calm before the storm ― the coronavirus hysteria didn’t reach a fevered pitch until late-February.

On the COVID-19 front, President Trump signed the US$8.3 billion emergency spending bill to combat the virus earlier today. Although it remains to be seen if the cash will stop the outbreak, the massive stimulus is being viewed largely as a calming measure.

The DOW Resumes March’s Descent On COVID-19 Fears

All week long I have shown the daily technicals for March E-mini DOW futures. The main reason why is to illustrate how far and how fast American equities have fallen. In a little over three weeks, the U.S. indices have plummeted from all-time highs to the verge of an intermediate-term correction.

For today’s late session and Monday, there are two key levels to watch in this market:

• Resistance(1): 38% Retracement, 26,535
• Support(1): Spike Low, 24,675

Bottom Line: Any chance to join the COVID-19 downtrend is one that shouldn’t be passed upon. If the March E-mini DOW rallies in the next few days, a sell from the 38% Current Wave Retracement is a solid way to join the trend. 

As long as the Spike Low (24,675) holds as the short-term bottom, I will have sell orders in queue from 26,494. With an initial stop loss at 26,601, this trade returns 100 ticks on a slightly sub-1:1 risk vs reward ratio.