S&P at key level after intra-day bounce
US indices bounced off their lows in the afternoon session after trading lower along with a slumping yuan, oil and copper. WTI (-4.0%), silver (-2.5%) and copper (-2.0%) have all sold off on the back of a rebounding US dollar and as sentiment was hurt by concerns over China’s economic health amid the latest Covid outbreak.
At the time of writing, the S&P had retreated to the point of origin of the breakdown around 3950ish... The sellers will need to step in around current levels if they want to see lower levels.
In as far as the earlier sell-off is concerned, there may be an element of profit-taking to consider, too. After the big rally in global indices last week, on the back of that cooler-than-expected US inflation report, momentum faded as the rally looked increasingly fatigued. After such a move, a retracement was always likely. It remains to be seen whether this will just be that – a retracement – or a more significant bearish development. It is far too early to tell.
But given the crypto turmoil, lack of economic growth, high inflation, rising interest rates, etc. etc., I would err on the side of caution.
By Fawad Razaqzada
At the time of writing, the S&P had retreated to the point of origin of the breakdown around 3950ish... The sellers will need to step in around current levels if they want to see lower levels.
In as far as the earlier sell-off is concerned, there may be an element of profit-taking to consider, too. After the big rally in global indices last week, on the back of that cooler-than-expected US inflation report, momentum faded as the rally looked increasingly fatigued. After such a move, a retracement was always likely. It remains to be seen whether this will just be that – a retracement – or a more significant bearish development. It is far too early to tell.
But given the crypto turmoil, lack of economic growth, high inflation, rising interest rates, etc. etc., I would err on the side of caution.
By Fawad Razaqzada
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