Summary:
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US indices trading lower ahead of the opening bell
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US500 drops to lowest since Monday in risk-off trade
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Sizable declines in Europe weighing on sentiment
The good run of late for US stock markets is facing a real test this afternoon, with all the major benchmarks called to open lower in what appears to be a clear risk-off move. The declines across the Atlantic are fairly measured at present, but unless the US step in buying then things could well get worse with some fairly heavy declines seen in Europe. The German Dax ha fallen by over 1.6% on the day, not far behind the even worse hit ITA40 with a series of negative news stories coming from the continent. A further indication that we could be set for a eventful US session is the move seen in the Volatility Index (VOLX on xStation), which has gained over 4% today.
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The VOLX has had a pretty sharp rise in the past couple of hours and while it remains not far from the bottom of its recent range, the market has moved above the H1 cloud which could indicate the near-term trend has turned higher. Source: xStation
On the data front there’s not too much of note to look out for today, with the latest weekly jobless claims coming in at 234k. This is down on the 253k seen last time out (with the high reading largely due to the government shutdown) but still a fair way above the consensus forecast for 220k.
The S&P500 moved close to its 200 day SMA during Wednesday’s session, but ended up lower, with the market taking a pause after the recent gains. The selling seen this morning has caused price to fall below the H1 Ichimoku cloud and there is some suggestion now that the near-term trend has turned lower. 2715 could be a level to look for on a daily closing basis going forward as if the market ends today below there an evening star of sorts will be printed. On the upside 2737 remains potential resistance while 2695 and the 2676 level that price broke up from after the Fed meeting could be of interest below.
US stocks could have turned lower in the near-term after price broke below the H1 cloud. 2695 and 2676 are levels to watch on the downside if the selling persists while a move back above the cloud would open up the possibility of a retest of YTD highs at 2737. Source: xStation
