11th October 2018 - Waiting for US Equities indexes following spike to the upside...

Walid Salah Eldin

Active member
The equities markets are waiting now for upside spike today or later tomorrow to watch containing degree of yesterday US equities indexes dip.
After US Treasury Secretary Steven Mnuchin raised the concern about the trade war against China by saying that China shouldn't weaken its currency as long as there is no deal yet adding that "the Yuan should be part of any possible trade deal". He is right the currency war is very important part of the trade war.

In the same time Trump was blaming the Fed for dampening the equities market yesterday by saying following the session that "The Fed is moving too fast with interest rate hikes".
His comments came a week after The Fed Chairman Jerome Powell said the central bank may eventually boost its benchmark past the neutral level, following the unemployment falling in September to the lowest rate since 1969!

US Treasury Secretary Steven Mnuchin's warning came, after IMF released on Tuesday it waited World Economic Outlook report which expected global expansion by 3.7% this year to be as the same as 2017, after it has expected last April this year growth to be by 3.9%.
IMF said that lower revision was mainly because Trump’s trade policies are a major reason why.

It was easy next to see the trade war fear containing the market sentiment punishing the US equities by massive selling wave looked to some extent overextended in that short time, as the US fundamentals are still OK unharmed by such comments.
The equities market across the globe suffered from that massive selling which sent Dow Jones down 3.15% and its future index referring now to losing of another 200 points.

The demand for safe haven and Trump criticizing of the Fed sent the US treasuries yield down raising the demand for bond generally.
The gold could find finally a leeway to rise above $1200 psychological level on this safe mode which came this time accompanied with pressure on UST yields.

USD lost its attractiveness on the slide of the cost of borrowing in the money market and also Mnuchin's warning which asks for no further Chinese currency depreciation versus the USD.
His comments were not positive to the Greenback, as they were not to the US equities which have been hit from another side by the oil prices slide which weighed down on the energy sector.
While Trump's criticism looked like it has been against the banking sector shares, as it has been against the Fed!

S&P 500 Future Daily Chart:

Before the US Session, S&P 500 Future rate is still in the red territory trying to get back above its daily SMA200 which has been penetrated yesterday following falling below its daily SMA50 and its daily SMA100.
This index is now trading in its sixth consecutive day of being below its daily Parabolic SAR (step 0.02, maximum 0.2) which is reading today 2916 which is far rate above today's current rate to express about yesterday massive falling.
After failing to overcome last Sep. 21 high at 2942, S&P 500 Future has been satisfied by reaching last on the third of this month 2940.40, before starting forming series of lower higher over the short term ended to breaking out of last Sep. 7 bottom at 2862.50.
The indexes gathered stronger downside momentum easily following that breaking out to reach today by the US session 2743.40 suggesting very strong need to usually seen correction to the upside, after such massive falling which happened accidently.
S&P 500 Future is surely well oversold over all daily Oscillators and its daily chart tells about RSI-14 existence inside its oversold region below 30 reading 20.640.
S&P 500 Future daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is having now its main line inside its oversold area at 10.082 leading until now to the downside its signal line which is higher n the same area reading 18.118 with no positive crossover inside yet.

Important levels: Daily SMA50 @ 2879, Daily SMA100 @ 2823 and Daily SMA200 @ 2767
Experienced S&R:
S1: 2743.40
S2: 2690.20
S3: 2674.40
R1: 2894.80
R2: 2942.40
R3: 3000.00

Have a good day

Kind Regards
Global Market Strategist of FX-Recommends
Walid Salah El Din


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