S&P 500 flirts with technical correction

24 September, 2020

The September selloff in US stocks doesn’t seem to be letting up. The S&P 500 is now flirting with a technical correction, which is when the price of an asset falls 10 percent or more from its recent high. The US benchmark equity index is now about 0.4 percentage points away from meeting that criteria, headed for its 100-day simple moving average (MA), with its futures flat during the Asian morning session.

Wednesday’s US session also saw the Nasdaq 100 (NDX) posting its first daily loss so far this week, leaning further into its correction. The tech-heavy index is now 10.55 percent lower on a month-to-date basis, and has fallen by around 13 percent from its record high. The NDX also appears set on a path towards its 100-day simple moving average, although Nasdaq 100 minis are noticeably undecided about whether to extend losses at the time of writing. Still, its 50-day counterpart now provides immediate resistance.

Note that the respective 14-day relative strength indexes for the S&P 500 and the Nasdaq 100 have yet to hit the 30 threshold, a level which denotes oversold conditions. That suggests that US stocks could yet see more declines over the near-term.

Investors are coming to terms with the idea that the next round of US fiscal stimulus won’t arrive before the US elections, despite the repeated stresses by Fed officials that more government financial support is needed in order to sustain the still-nascent economic recovery. The spectre of drawn-out political uncertainty even after the November 3rd elections is also casting a huge dark cloud over market sentiment.

Yet judging by some indicators, some market participants don’t seem too particularly alarmed. The VIX index, which is widely seen as Wall Street’s fear gauge, has actually moderated since making a run towards the 40 level earlier this month. The VIX now reads below 30, and is testing its 200-day simple moving average, which is also serving as its immediate resistance line. The CBOE’s put options to call options ratio is still around half compared to levels seen during the market crash in March.

Equity bulls and bear are expected to continue duking it out in dictating how much longer the current selloff will persist. Although the longer-term investor will be heartened by the Fed’s lower-for-longer rates mantra, which should be supportive for stocks for years to come, perhaps they’ll just have to weather these near-term bumps along the way. At the time of writing, the FXTM trader sentiment remains net long on both the SP500m as well as the ND100m.


Source  
Risk sours on stimulus rollercoaster23 Oct, 2020  

Lo and behold, there is still life in King Dollar! With stocks dropping to two-week lows, albeit briefly, the world's reserve currency has perked up today as the stimulus...

The Art of The Deal22 Oct, 2020  

US stock markets finished modestly in the red yesterday with the S&P500 down 0.2% and the Dow off by 0.3% as investors continued to eagerly watch negotiations...

US stocks face Cinderella moment21 Oct, 2020  

Equity traders appear willing to have one last dance at the "fiscal stimulus" ball, swaying to any tune that hints at a US fiscal stimulus package being agreed to before...


Earnings Preview: Tesla in focus21 Oct, 2020  

One of the most striking things about Tesla Inc. shares is the fact that they have appreciated over 400% since the start of the year! Such mouth-watering gains...

Netflix's chilled Q3 earnings may still jolt shares20 Oct, 2020  

Netflix is set to announce its Q3 earnings after US markets close on Tuesday, with its shares needing a new catalyst to post a new record high. Since hitting the $575.20...

Oil: Stuck around $40 with nowhere to go19 Oct, 2020  

Later today, OPEC+ is set for a meeting to evaluate the state of the global market. And the outlook isn't particularly inspiring for Oil bulls. Since bouncing out from...


Mid-week technical outlook: Are Dollar bulls back in town?14 Oct, 2020  

It looks like everyone wants a juicy piece of the world's most liquid currency thanks to the International Monetary Fund's (IMF) bleak forecast and fading US stimulus...

JPMorgan stock set for big earnings-day move13 Oct, 2020  

Before US markets open on Tuesday, JPMorgan Chase & Co. will do us the honours once more of being the opening act for this latest US earnings season...

Stimulus news, Brexit talks, Economic data & Earnings12 Oct, 2020  

Last week was a good one for equity investors. The S&P 500 and Nasdaq Composite rallied 3.8% and 4.6% respectively with their best weekly performance since July...