Traders see some green today as the S&P climbs a little over 1% today. After several weeks of red, investors may see a minor turnaround for the time being. However, SPX500 bulls should still be wary of a few things that warn of a recession.
There are signs that the index could be bottoming and ready to shift momentum to the upside, however, the past few times have failed to do so. But, with every failed attempt, we have seen a significant bounce that encourages traders to scale back in. The problem is that volatile swings in either direction that ultimately end up in lower lows keeps investors from having enough confidence in the market.
Bond yields have come back up again to around 2.86% which points towards strength in the USD. Treasuries have retained a 2.8% yield for the past month or so. The dollar index has been pulling back regardless, so it could be indicating that either the USD has been priced in or that we are gearing for another long setup on the dollar.
COT suggests that the dollar is still long-heavy while both long and short contracts increase from last Tuesday. At the same time, institutional holdings on the SPX500 have decreased while short contracts saw an increase. The number of long vs short contracts is continuing to even out which is alarming to investors.
A look on the 4H timeframe helps us see that a bottom could be coming soon based off a few technical indicators. Lower lows have been made but at a decreasing rate. Instead of a stair-like pattern we used to see, the lower lows are forming a kind of slope pattern. This could be indicating that a push higher is likely. The question lies in how much higher will it go before retracing once again.
The 1D timeframe also provides some potential ideas of where the index could move from here. This current bounce could take the market to that falling trend line which has held up pretty well for three attempts in the past. However, if that gets broken, we could see another test a little higher around the $4060s. So, for this week, I am not expecting a bottom to form here, but I do expect a bounce at least to take price a little higher.
UK100 looks somewhat promising on the 1D after price runs up 1.5%. Price was quick to come back up from the bounce off the 200 DMA which suggests that a potential break in this wedge formation could happen. If price does end up breaking and closing above this level, we may see a run higher towards the 7620s.
This morning at 8:30 am Eastern Time, the United States’ Bureau of Economic Analysis released even more bullish USD news. The Core Personal Consumption Expenditures (PCE) Price Index, which measures changes in prices for consumers (excluding volatile food and energy prices), rose more than expected month-over-month. A 0.5% increase was expected for August, with 0.6% […]
A strange series of events recently sent the United Kingdom’s Pound Sterling tumbling to historic lows. Just weeks after the death of Queen Elizabeth II (a head of state who was uniquely well-liked among the UK’s population by contemporary standards) Kwasi Kwarteng, Britain’s new chancellor in recently appointed Prime Minister Liz Truss’ administration, issued a […]
Last week’s selloff was brutal for investors in the US stock market: the Dow Jones Industrial Average closed at its lowest level since late 2020, falling to 29590.41, losing 1.6% on Friday alone. With the S&P 500 currently down a whopping 23% from January’s highs this year, and other indexes close behind percentagewise, stock market […]
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