Global equity markets drop sharply

6 February, 2018

Global markets were having  a case of the Monday blues today as they tumbled sharply on the back of fears around global economic growth and a potential slowdown. There has been talk for some time about the threat of a global slowdown, but also an increase in interest rates flowing into the market. At present this is mixing together to cause markets to stress heavily and of course equity markets are the first to fall as a result. The big mover for me today was of course the S&P 500 which I've been bullish on for some time, but as a result of the movements today the certainty has all but evaporated in a hurry. The Trump effect looks like it may need to shine a little stronger to help hold back the tide of equity markets.

On the charts the S&P 500 plummeted today and was only stopped after hitting the 100 day moving average in an aggressive move which can almost be described as a crash. However, I hesitate to call it that and add that it did the same thing in 2011 before recovering, so the horse has not yet bolted for a full on bear market. If the market is set to continue in a bearish trend then the 100 day moving average will be lucky to hold this back tomorrow, and the 200 day moving average could become the line in the sand. Support levels can be found at 2628 and 2564 on the charts. If the market did jump higher, then 2698 and 2743 could be key resistance levels the market could target when it comes to profit taking on the volatility. Overall though this sort of volatility is where traders can make and break fortunes quickly, as the market can quickly swing violently and rapidly without warning.

Previously with any large bearish movements we have seen gold swing back into the picture as traders look to hedge on movements like this. As a result of all the movements I am surprised to see that movements thus far have been far from what you'd expect. Which indicates to me that markets are not entirely convinced that this is anything to get to worried about already.  But gold is one of the major markets to watch in any event when volatility becomes a serious worry for markets.

Gold on the charts is looking somewhat impressive as markets have been bullish about it today, bouncing near support at 1326 to lift higher above the current support level of 1336. A positive open could see it extend higher to 1349 and 1357 in these current market conditions. Expectations will be high that we could see traders move across if the futures market for equity contracts continues to come under pressure.


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