US equities suffered the steepest decline for the year overnight. Doubts over US president Donald Trump's ability to push through his policies are seen as the major factor driving stocks down. In particular, some economists pointed out that there is simply not enough money in the government to allow for a tax cut, nor the fiscal stimulus programs. DJIA dropped -237.85 pts, or -1.14% to close at 20668.01. S&P 500 lost -29.45 pts or -1.25% to close at 2344.02. Financials led the way, dropping more than -2.5%. Treasury yield also suffered with 10 year yield extending the near term fall from 2.615 to close at 2.436, down -0.037. Dollar index broke 100 handle to as low as 99.66. In the currency market, risk aversion boosted Yen to be the strongest major currency for the week. Commodity currencies are the weakest with Aussie leading the way down. Sterling and Euro are relatively resilient.
DJIA: Correction from 21169.11 medium term to extend
The sharp selloff in DJIA suggests that 21169.11 is a medium term top. This is supported by bearish divergence condition in daily MACD. The correction from there would now likely extend to 55 day EMA (now at 20393.33) and below. At this point, we'd expect support from 38.2% retracement from 17883.56 to 21169.11 at 19914.03 to contain downside and bring rebound. Based on current outlook, there is little chance for up trend resumption in near term. And correction/consolidation from 21169.11 should extend for a while.
