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  • The Dow dropped 2.72% on Wednesday falling 710 points.
  • The S&P 500 just over dropped 2.50% and the Nasdaq fell 2.19%.

Fundamental backdrop

The world indices have struggled on Wednesday after it seems bets are being placed on another shutdown in the US. The latest statistics show that half the states in the US are now reporting a rise in case numbers. Here are some of the latest headlines:

  • Arizona COVID-19 cases rose to 59,974 from yesterday’s 58,179.
  • Florida’s COVID-19 cases rose 5.3% Vs. previous 7-day avg. 3.7%.
  • California COVID-19 cases rose by 7149 Vs 5019 yesterday.
  • Texas COVID-19 hospitalizations increase by 7.3%.
  • N.Carolina reports 1,721 new virus cases, the second-highest yet
  • US CDC has also reported 34,313 new coronavirus cases as of yesterday and total cases now 2,336,615 Vs 2,302,288 in the previous report on June 23

The travel sector has been hit the hardest in the S&P 500. The 5 worst performing companies are Norwegian Cruise Line’s (-12.25%), Carnival Corp (-11.42%), Royal Caribbean Cruises (-11.07%), Wynn Resorts (-10.71%) and Trip Advisor (-10.54%). There are only 22 companies in the black with gaming, telecommunications and supermarket names outperforming.

The VIX has also moved around 10% higher on Wednesday at one stage the volatility index traded at 34.39 before settling at 34.59. On the daily chart, the 200 Simple Moving Average (SMA) has become an important indicator. The index used the 200 SMA as support and pushed higher. In the future watch out for a break below the average. 

S&P 500 1-hour chart

The hourly chart below shows the extent of the sell-off on Wednesday. The market has now made a new lower low lower high formation which could indicate more bad news is to come. The price is also firmly below the 200 and 55 moving averages which adds to the bearish bias. On the daily chart, the main support to watch is holding at 2965.66. If this level breaks not only will it make a lower low lower high on the hourly but then the daily chart too. 

The indicators have also moved to the downside. the histogram is in the red on the MACD and daily is also the same. The market then found some support at a trendline marked in black. This could give way in the future but it was enough to provide some support for now. The bias then seems to be set only a change in the fortunes regarding the COVID-19 pandemic could change the course of equities now. 

S&P 500 Technical Analysis

Additional levels