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S&P500: US indices are down
22/03/2017
Overview and dynamics
After the rapid growth against the backdrop of the victory of Donald Trump in the US presidential election, US stock indices stabilized at new historical highs this month. However, yesterday the US indices fell sharply, for one day having crossed the entire growth of this month. As a result of the Tuesday session, the main stock indexes recorded the maximum decline since the beginning of this year.
So, the Dow Jones Industrial Average dropped by 238 points (by 1.1%), Nasdaq Composite fell by 1.8%, S & P500 fell by 1.2%. The most affected stocks are in the financial sector, which fell sharply Tuesday along with the yield of government bonds. The subindex of shares of industrial companies fell by 1.5%. The fall in oil prices also puts pressure on the oil and gas sector in the S & P500 index. The yield of 10-year US government bonds fell, according to Tradeweb, to 2,432% from 2,472% the day before. After Trump's victory in the elections, US stocks and the dollar rose against the backdrop of hopes that Donald Trump is implementing his program to support business, reduce taxes and increase budget spending, including on the US infrastructure. Now, many investors are increasingly skeptical about President Trump's plans to stimulate the economy.
The US dollar is also weakening in the foreign exchange market amid investor skepticism about the likelihood that Trump will fulfill his promises to stimulate the US economy. The dollar is not even helped by the tightening of monetary policy on the part of the Fed. It seems that now all the attention of investors is focused on whether Trump will manage to fulfill his promises. According to the Bank of America Merrill Lynch, almost a third of investors consider shares overbought, which is the maximum level for 17 years.
Tomorrow at 12:00 (GMT) the speech of the head of the Federal Reserve, Janet Jellen, begins. It is possible that the dollar will receive support if Janet Yellen's speech contains signals to accelerate rates of rate hikes in the US. The fact that the Fed intends to raise just two more times this year's rates, market participants have already heard last week, when the Fed made a decision on the rates. How will speech Janet Yellen affect the US stock market - it is difficult to say for the time being.
Technical analysis
In March, the S & P500 index updated its absolute historical high, reaching the mark of 2400.0. However, in the future, like other major US stock indices, the S & P500 index suspended its growth. And for yesterday, the index lost all of its gains this month.
With the opening of today, the decline in the S & P500 index continues. At the beginning of the European session, the index is trading near the mark 2332.0 and the support level of EMA50 (on the daily chart).
Over the last two days, the index broke through two strong local support levels of 2369.0 (EMA200 on the 1-hour chart), 2348.0 (EMA200 on the 4-hour chart). Indicators OsMA and Stochastics on the 1-hour, 4-hour, daily charts went to the side of sellers.
On the weekly chart, the indicators also unfold to short positions. It seems that the long-overdue correction after such a rapid growth of the indices began to be realized.
So far, the S & P500 has been restraining the support level of 2332.0 from further decline. In case of its breakdown, the S & P500 index decline may continue with the targets of 2275.0, 2265.0 (2180.0 (Fibonacci correction level of 23.6% in the wave of growth of the S & P500 index from February 2016 to the level of 2400.0).
The breakdown of the support level of 2265.0 will strengthen the risks of further decline of the index to the level of 2226.0 (EMA200 on the daily chart and November highs). The breakdown of the support level 2180.0 (the Fibonacci retracement level of 38.2%) will cancel the bullish trend of the index.
The reverse scenario involves the return of the index above the level of 2348.0 and the resumption of growth. But only when you fix the index above the level of 2369.0 you can return to safe shopping. So far, negative dynamics prevails.
Support levels: 2332.0, 2300.0, 2275.0, 2265.0, 2226.0, 2200.0, 2180.0
Resistance levels: 2348.0, 2369.0, 2400.0
22/03/2017
Overview and dynamics
After the rapid growth against the backdrop of the victory of Donald Trump in the US presidential election, US stock indices stabilized at new historical highs this month. However, yesterday the US indices fell sharply, for one day having crossed the entire growth of this month. As a result of the Tuesday session, the main stock indexes recorded the maximum decline since the beginning of this year.
So, the Dow Jones Industrial Average dropped by 238 points (by 1.1%), Nasdaq Composite fell by 1.8%, S & P500 fell by 1.2%. The most affected stocks are in the financial sector, which fell sharply Tuesday along with the yield of government bonds. The subindex of shares of industrial companies fell by 1.5%. The fall in oil prices also puts pressure on the oil and gas sector in the S & P500 index. The yield of 10-year US government bonds fell, according to Tradeweb, to 2,432% from 2,472% the day before. After Trump's victory in the elections, US stocks and the dollar rose against the backdrop of hopes that Donald Trump is implementing his program to support business, reduce taxes and increase budget spending, including on the US infrastructure. Now, many investors are increasingly skeptical about President Trump's plans to stimulate the economy.
The US dollar is also weakening in the foreign exchange market amid investor skepticism about the likelihood that Trump will fulfill his promises to stimulate the US economy. The dollar is not even helped by the tightening of monetary policy on the part of the Fed. It seems that now all the attention of investors is focused on whether Trump will manage to fulfill his promises. According to the Bank of America Merrill Lynch, almost a third of investors consider shares overbought, which is the maximum level for 17 years.
Tomorrow at 12:00 (GMT) the speech of the head of the Federal Reserve, Janet Jellen, begins. It is possible that the dollar will receive support if Janet Yellen's speech contains signals to accelerate rates of rate hikes in the US. The fact that the Fed intends to raise just two more times this year's rates, market participants have already heard last week, when the Fed made a decision on the rates. How will speech Janet Yellen affect the US stock market - it is difficult to say for the time being.
Technical analysis
In March, the S & P500 index updated its absolute historical high, reaching the mark of 2400.0. However, in the future, like other major US stock indices, the S & P500 index suspended its growth. And for yesterday, the index lost all of its gains this month.
With the opening of today, the decline in the S & P500 index continues. At the beginning of the European session, the index is trading near the mark 2332.0 and the support level of EMA50 (on the daily chart).
Over the last two days, the index broke through two strong local support levels of 2369.0 (EMA200 on the 1-hour chart), 2348.0 (EMA200 on the 4-hour chart). Indicators OsMA and Stochastics on the 1-hour, 4-hour, daily charts went to the side of sellers.
On the weekly chart, the indicators also unfold to short positions. It seems that the long-overdue correction after such a rapid growth of the indices began to be realized.
So far, the S & P500 has been restraining the support level of 2332.0 from further decline. In case of its breakdown, the S & P500 index decline may continue with the targets of 2275.0, 2265.0 (2180.0 (Fibonacci correction level of 23.6% in the wave of growth of the S & P500 index from February 2016 to the level of 2400.0).
The breakdown of the support level of 2265.0 will strengthen the risks of further decline of the index to the level of 2226.0 (EMA200 on the daily chart and November highs). The breakdown of the support level 2180.0 (the Fibonacci retracement level of 38.2%) will cancel the bullish trend of the index.
The reverse scenario involves the return of the index above the level of 2348.0 and the resumption of growth. But only when you fix the index above the level of 2369.0 you can return to safe shopping. So far, negative dynamics prevails.
Support levels: 2332.0, 2300.0, 2275.0, 2265.0, 2226.0, 2200.0, 2180.0
Resistance levels: 2348.0, 2369.0, 2400.0
