Summary:
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US indices in the red ahead of Wall St. open
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US500 hands back post midterm elections gains
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Longer term reversal signal for US2000?
It looks like US stock markets will open lower this afternoon, with indices falling lower after Friday’s declines. It is officially a bank holiday stateside for Veterans’ day but while volumes may be a little lower both the NYSE and NASDAQ will open as usual. There’s been some notable selling in Europe this morning with the DE30 falling down to its lowest level of the month and this appears to be weighing on US benchmarks. Due to the bank holiday not just in the US but also in Canada its a very light economic calendar for North America with no releases of note scheduled for the rest of the day.
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US markets are in the red ahead of the Wall St. open with the US100 the biggest loser and the US500 back around the levels seen on the US midterms last week. Source: xStation
Having said that there are some possible fundamental developments regarding trade to keep an eye on with the WSJ reporting that the Trump administration is planning export controls on China’s intellectual property theft. Trade tensions between the world’s two largest economies have taken a back seat to US politics in the newsflow of late but now that the Midterms are behind us they could come back into focus ahead of the G20 meeting next month.
The US500 rallied fairly strongly last week after the midterm election results were known but the prior swing high around 2824 wasn’t breached to the upside and there is still a feeling that we may not have seen the end of the selling which caused the market to swoon in October. Price has fallen back near the 2760 level and this is a region to look to for possible support having previously attracted buyers before offering resistance last week. Following the election results the market made a clean break up through here and as such it could be important to see if the market can hold above it.
The US500 has dropped lower of late and the market is now not far from the key swing level around 2760. Longs will want to see this hold as a break below would put the recovery from last month’s low under serious threat. Source: xStation
While last month’s sell-off in the US500 made the headlines the declines were actually first seen in small cap stocks with the US2000 leading the way lower. If the US2000 still leads its larger cap peer then this could be a worrying omen as the market printed a possible negative reversal signal on Friday. After recovering from its own October lows of 1457 the US2000 enjoyed quite a decent bounce but failed to move back above its previous swing level of 1601 despite rallying after the election. An evening star formation is now apparent with a high of 1589 and unless price gets above here then another move lower may lie around the corner.
The US2000 is back below where it traded when the Midterm results were announced and has printed an evening star on the D1 chart. This market led the way lower for the US500 last month and could be seen as a possible warning sign to US500 longs. Source: xStation
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