Dow: "Do you have the courage to sell if it falls below $20,000?", Nikkei Average: "Sell from 16,000 yen?"—a level that serves as a litmus test

Technical Graphs and TB Graph 6Release date: 2020/03/13 09:12

Historic crash. I do not think I will encounter such a crash like this in my lifetime. From this plunge, the Dow's 25-day moving average deviation exceeded -20% and reached -22.14%. I am attaching today the deviation data for the decline in the month after the Lehman shock that I attached yesterday, but it exceeded the -19.981% recorded on 2008/10/09. Therefore, the total of the Dow's three deviations (which is also attached) reached -34.68%.

The VIX is also 75.47. (As noted yesterday) 08/10: 80.06, 08/11: 80.86 are near the highest values.

The fact that rate cuts were not decided at the ECB Council is cited as one factor, but currently monetary policy is not an immediate comforting material for market anxiety. Looking at the US market, as of this morning, the cut at the 3/18 FOMC is not as large as last week, but calmly pricing in a cut to 0.25% at 87%, and to 0.50% at 13%.
What would be effective in such a state are measures that directly address stock supply/demand, such as the temporary prohibition on new short selling in the two months before the Lehman shock and the Bank of Japan's ETF purchases (not limited to annual quotas, with announcements that for the coming months the pace would be around 9 trillion yen per year, etc.). In that sense, it would be effective if ultra-tools that include stock ETFs among the QE targets, as being discussed in the US, could be applied in Japan as well.

However, as the number of infections in Europe and the US continues to rise day by day at an accelerating pace, it was revealed that a male close aide to Brazilian President Bolsonaro, who attended a meeting with President Trump on the 7th of this month, was infected, heightening concerns about infections among key figures.

Markets, how far down do the bears intend to target? If it is a drop of one-third from the index's high, since the Dow's high was 29,551.42 dollars on 2/12, it would come to around 19,700, and after breaking below 20,000 it would test whether there is the courage to sell after breaking 20,000. Applied to the Nikkei Average at 24,000 yen, that would be around 16,000 yen. If these levels fall and then rebound, unless the fear among sellers that there is no lower level to sell at resurfaces, it may be difficult to stop the churn of this intraday market. Today is Major SQ. At the open, and with the SQ value confirmed, the subsequent intraday figures (open, high, low, close) are numbers that securities traders will use afterward, so they should be watched.