S&P dragged down by US politicsLast week, the market was significantly affected by political uncertainty in the US. Technically, everything looked decent, and there was no change in fundamentals as inflation continued to slow down and banks reported positively. Given this, I was expecting a rotation within a narrow range, but the uncertainty was too strong, causing a sell-off in all major sectors (see Market Strength Index). The only sector that showed some resilience was Financials, but even it eventually succumbed. The week closed very weak, with a bearish engulfing candle, which formally starts a weekly consolidation.
It is important to remember that the market is still in a weekly uptrend, and we should treat weekly consolidations as short-term pullbacks until the price sets a convincing lower high on the weekly chart. I would expect the price to try retesting the gap from Wednesday, the 17th. Whether this retest is successful or not will determine the future of the market. It is also likely that in the coming months, the market will be very sensitive to political developments.
Disclaimer
I don't give trading or investing advice, just sharing my thoughts.
