Friday's Market Minute: Late-Day Rally Wanes As Coronavirus Looms

Equity futures saw a blistering 1.3% rally in the latter half of yesterday, shrugging off both the World Health Organization’s declaration of the coronavirus becoming a global emergency as well as the U.S. State Department issuing a red alert advisory urging Americans not to travel to China.

The move was enough to propel S&P 500 (INDEXSP: .INX) futures up 0.7% on the day, but enthusiasm seems to be waning as markets now point toward a lower open. After Sunday’s -0.6% open, the /ES has since recovered and filled the gap, but failed to reclaim last week’s all-time highs. The downward spike that opened the week also generated several bearish technical signals, including the RSI crossing below the overbought threshold, a Parabolic SAR crossover, and the ADX rising from a trough which suggests increasing directional strength.

The contract has held between the Linear Regression 50% Channel upper line and the 21-day EMA, or roughly between 3,300 and 3,275, for the past few days. Meanwhile, Russell 2000 futures RUT have fallen below their 50-day SMA and Emerging Markets futures (/MME), which are weighted toward China, are breaking to the downside out of an upward channel that began in August.

Watch to see if the contract holds support near 1,060-1,055, the area of the Linear Regression Line and the Volume Profile Point of Control, as well as the previous lows near 1,030 for clues to additional downsides for world markets.

Image by 鹏 程 from Pixabay