U.S. Markets Crash, DOW Plunges Toward 25,000

U.S. stocks are on a steep decline during this post-FED session. At the halfway point of the Wall Street trading day, the DJIA DOW (-1400), S&P 500 SPX (-135), and NASDAQ (-350) are all down more than 3.5%. For now, the relative stability of June is being tested and markets are under siege.

Make no mistake, a 1300+ point drop in the DOW is a big deal. It was only yesterday that FED Chairman Jerome Powell attempted to reinforce investor confidence by stating that it was only a “matter of time” before the U.S. and global economies rebounded. Now, investors are headed for the hills in an all-out equities sell-off.

Once again, the coronavirus pandemic is the gift that keeps on giving. Fresh reports tout that the virus’s “second wave” is in full swing, impacting Texas, Florida, and California. The markets are taking the news to heart and risk-off is the word of the day as tensions mount.

U.S. Stock Markets Collapse Amid “Second Wave”

All in all, the scene is not good for U.S. stocks. The CBOE’s Volatility Index (VIX) is reading nearly 35.00, the highest since May 13. June E-mini DOW futures are echoing the negative sentiment and running toward weekly support.

Here are the key levels to watch ahead of Friday’s close:

• Support(1): Weekly SMA, 25,250
• Support(2): Bollinger MP, 25,182

Bottom Line: As a general rule, big-round-numbers make for solid support levels in the markets when they coincide with technical indicators. That is what we now have in the June E-mini DOW; the convergence of the Weekly SMA and the quarter-handle of 25,250.

Until Friday’s close, I’ll have buy orders in the queue from 25,275. With an initial stop at 25,169, this trade yields 100 ticks on a sub-1:1 risk vs reward ratio.