Summary:
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US500 falls to below prior support around 2820
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Benchmarks in danger of following Europe lower
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US industrial production comes in below forecasts
US markets have begun their day lower, with all 3 of the major indices in the red on the opening bell. The US500 has declined to trade back below recent lows around 2820 and this level could be seen as important support, with a clear drop below it opening up the possibility of a sustained sell-off. Not only has 2820 marked the low of the recent range, it also coincides broadly with the 21 period EMA, and should price fall below here then the recent uptrend could be seen to come under serious threat.
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The US500 is forming a fairly ugly candle on D1 with the market engulfing all of yesterday’s range and falling below the 2820 level which coincides with prior lows and also the 21 EMA. Source: xStation
As we’ve noted previously the US has fared relatively well compared to its European peers in recent sessions, but the markets are in danger of catching up to the downside. While it is logical that European equities are more closely integrated with the situation in Turkey, and therefore more vulnerable to losses due to the crisis the US is far from immune from these effects. The DE30 has sustained fairly large declines in the past few sessions and there is a growing divergence between its price and that of the US500.
The DE30 has been worse hit than the US500 so far in recent sessions, with the former opening up a notable divergence with the latter. Will the US500 fall further to catch up? Source: xStation
The earlier retail sales figures produced some mildly positive news for the US, but since then we’ve had the latest industrial numbers which have been a bit of a disappointment. In M/M terms for July US industrial production came in at just +0.1% missing the consensus forecast (+0.3%) for only the 3rd time in the past 8 releases. However, similar to what we saw in retail sales, revisions to the previous data point have skewed how the release appears in relative terms. A sizable upwards revision from +0.6% to +1.0% has weighed on the most recent release, relatively speaking, and as such the data point isn’t as bad as it first appears.
