Dow Jones futures are lower and point to a lower opening count on the Dow Jones Industrial Average after Apple issued a warning stating that the coronavirus outbreak could hamper sales and earnings projections in 2020.
Apple has had to shut down most of its production facilities in China as the coronavirus spread out of control in January. The coronavirus outbreak is yet to be contained, and the company has now indicated that it would most likely miss its earnings guidance for the 2nd quarter of 2020 as a result of supply disruptions. Many of Apple’s suppliers are still not on their duty posts as restrictions to transportation and quarantines have led companies to close temporarily.
Apple is trading 1.98% lower in premarket trading. The slump of HSBC stocks as a result of the earnings miss is also affecting the Dow Jones futures assets, which is also trading 0.09% lower as at the time of writing.
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Technical Outlook for Dow Jones
The Dow Jones futures 4-hour chart shows that the asset has breached the support line of the upper ray of the pitchfork, with short term support located at 29281. The daily chart shows a classical “W” harmonic pattern, with the downside leg from the D point already in motion.
The expectation from this pattern is for the price to continue the pullback, at least to the nearest support level, which happens to be at the 28979 price level (previous high of 9/10 Jan and a previous low that occurred on 10 Feb). Below this level, the next support level comes in at 28195, which is where point C of the W pattern rests. It is also the site of the previous highs of 19/29 Nov 2019. However, a price collapse from 28979 will need to breach the middle ray of the pitchfork to make this move a reality.
On the flip side, potential recovery could target the previous all-time high levels. However, traders may need to start considering that a pullback after such a lengthy bull run, may not be too far off, given that the correction of the divergence signal provided by the oscillator and the recent price highs is also playing out.
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