The global rout in equities continued early in New York as technology, retailers and energy stocks and risk assets continue to get repriced. The US dollar also rallied along with Treasuries, as the yield on the 10-year fell to the lowest level since September. Risk aversion momentum continued as concerns grow on the global slowdown in economic growth, tighter fiscal conditions, fading US fiscal stimulus and trade wars.
The CNBC Global CFO Council survey was released and showed 51.4% of CFO’s expect the Dow Jones to fall below 23,000 before reaching the 27,000 level. 35.1% of the CFO’s were unsure what would happen first and 13.5% expect it to cross 27,000 level first.
What is typically a quiet holiday week has seen volatility surge as the VIX jumped over 12% and moved closer to the October 11th high. Geo-political risks will likely keep the markets moving as Brexit headlines will be plentiful and EU will respond to the submitted budgets, with the focus on Italy. The Dow Jones Industrial Average did tentatively respect the 24,400 and potentially formed a bullish Gartley pattern. Point D is targeted with the 78.6% Fibonacci retracement level of the X to A leg and the 141.4% Fibonacci expansion level of the B to C move.
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