Technical Analyst, Saxo Bank
Seems like Portfolio Mangers are done cleaning house. Historically Portfolio Managers come back after the Labor Day weekend (early September) they get rid of stocks they do not want on the books going into the last quarter of the year. The selling pressure could be on pause for a few days and a minor rebound is in the cards. But be cautious, selling pressure could soon return
S&P 500 closed at lowest level in almost two years but did not break below the June lows at 3,636. The Index has been dropping for almost 10 days straight and is ripe for a correction. But do not expect a major reversal. A correction to around 3,800 before selling pressure resumes is likely.
Bottom fishers might get a little tailwind and try lifting the market higher toward towards key resistance at 3,900 but is not likely to have the power to test it. Trend is down and it would take a close above 4,308 to reverse that.
A close above 3,900 would merely just put it on pause. RSI is showing negative sentiment with no divergence indicating lower levels below 3,636 is likely.
A close below 3,636 will confirm the medium-term downtrend. Support at 3,509 but if this scenario unfolds a sell-off down to the consolidation area around 3,200 is likely.3,200 is close to the 0.618 retracement of the 2020-2021 uptrend and the 1.618 projection of the recent correction.
Nasdaq 100 did not drop to a lower close than the June close let alone testing June lows at 11,037. Yesterday’s market has formed an Inverted Hammer. In most cases it is a continuation candle but if market closes above either the inverted hammer high or the high of the previous candle (whichever is the highest) it usually acts as a bottom and reversal pattern i.e., if Nasdaq closes above 11,474 a correction up to around 11,769 -12,000 is likely. If closing above 12,062 a correction could extend to around 12,500.
However, the trend is down supported by rising volume the past 4 weeks, RSI is showing negative sentiment with no divergence, all indicating lower levels are likely.
If Nasdaq 100 closes below 11,037 there is some support around 10,677-10,580 area but lower levels below 10K are not unlikely.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.