Today’s US equity market session is critical after yesterday’s technical break
Head of FX Strategy
Summary: The S&P 500's breach of its 200-day moving average means that we should all take notice, simply because the US market is the single largest market and always the basic proxy for risk appetite.
Though I am not an equity strategist, it is important to bear in mind that the US market is the single largest market and always the basic proxy for risk appetite. For this reason, every strategist needs to have their eye on the US equity market when a big technical break has unfolded, to consider the ramifications for other asset classes. See chart below:
- Arguably, today’s and this week’s closing level is very critical for the outlook from here now that we have crossed this technical “Rubicon”. The rally in the futures overnight would have taken the opening level back above the 200-day moving average at times, but the closing level is far more important.
- Put shortly, if the market closes on or near a new low it will make for a very uncomfortable wait for the Monday open. Recall that the 1987 crash unfolded on a Monday as well after a very ugly close into the Friday.
- This is not to call a crash but merely to suggest that the nature of today’s US session is potentially very critical.
Note the 40-week (200-day equivalent on the weekly chart) going back even further and the degree to which this level often is in focus:
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Energy crisis could turn energy stocks into secular winnerWith long-term expected returns for the global energy sector close to 10%, we look at 40 stocks that could be set to cash in.
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.