American equities are tumbling today as traders react to the surging number of Covid-19 cases and election uncertainties in the US. Dow Jones, S&P 500, and Nasdaq 100 index futures are down by close to 1%.
InvestingCube's S&R Levels
In Buy Zone
In Asia, equities are also in the red, with the Nikkei 225 and Hang Seng index down by 0.30% and 0.45%, respectively. Elsewhere, in Europe, futures tied to the DAX index, FTSE 100, and Stoxx 50 are in the red too.
The biggest concern among traders is that the number of Covid cases has been on an upward trend. Yesterday, the United States confirmed more than 73,000 cases as the pandemic continued to get out of control. In total, the country has recorded more than 500,000 cases in the past week. And, as winter arrives, there is a possibility that the number of cases will continue rising. Worse, hopes of a vaccine in the immediate near term faded as Pfizer’s CEO ruled out against approval before the election.
The Dow Jones, DAX index, and other global indices are also concerned about the upcoming election. With more than 60 million votes already cast via absentee ballots, investors are worried about contested results.
Meanwhile, positive results from Microsoft and Deutsche Bank have not ameliorated the two indices. Microsoft reported better results mostly because of high demand for its Azure product. At the same time, Deutsche Bank reported a profit for the first time in months. It also reported a surge in its trading business.
Later today, the Dow Jones and other indexes will react to results from companies like Visa, Mastercard, UPS, Amgen, Boeing, Gilead Sciences, and Anthem, among others.
In the economic calendar, we will receive the interest rate decision from the Bank of Canada. We will also receive the Swedish retail sales, industrial and consumer confidence, and US mortgage data.
Dow Jones technical outlook
On the daily chart below, we see that the Dow Jones has fallen for the past three consecutive days, forming a three black crows pattern. The index has also formed a head and shoulders pattern, with the neckline being at the current price. The price has also moved below the 25-day and 50-day moving averages.
Therefore, I suspect that the index will continue falling ahead of the upcoming election. On the flip side, a move above the psychological level of $28,000 will invalidate this trend.