* U.S. equity index futures suggest sharp opening losses
* Euro STOXX 600 index slides ~2.5%
* Dollar, gold edge up; crude down, bitcoin off >8%
* U.S. 10-Year Treasury yield ~1.32%
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DOW INDUSTRIALS SET TO OPEN ON A REAL DOWNER (0900 EDT/1300
GMT)
It appears last week's choppy range trade in the Dow Jones
Industrial Average was just a pause in a developing
decline. This as CBT e-mini Dow futures now suggest the
blue-chip average is poised to slide nearly 2%, or more than 600
points, at the open. That would be the Dow's worst open since a
2.6%, more than 700 point, collapse at open on June 11, 2020.
If so, the Dow will kick of regular session trading on
Monday down more than 4% from its August 16 record high, and on
pace for a fourth-straight week of losses.
With the projected opening break lower, the DJI can be on
track to threaten a number of significant support levels:
These include its late July and June lows in the
33,741.76/33,271.93 area, as well as the broken log-scale
resistance line from 1929, which is now support, around 33,675,
and the rising 40-week moving average, which ended last week at
33,325.
Since breaking out above the more than 90-year resistance
line earlier this year, the Dow has been reacting positively
each time it has fallen toward, or tested, this line.
Therefore, a weekly close back below the broken resistance
line can suggest a throw-over reversal, leaving the index
vulnerable to a much more significant decline.
In that event, the early 2020 high, at 29,568.57, and the
still open weekly gap from early November of last year, which
requires a fall to 28,495.05, may be the next significant
magnets.
Of note, weekly momentum diverged into the Dow's August
peak, and remains on the back foot. The weekly MACD ended Friday
at a 10-month low.
(Terence Gabriel)
*****
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