Summary:
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US benchmarks remain near weekly lows
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Philly Fed tops estimates; Initial jobless rises
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S&P500 pulls back to 8/21 EMA zone
Wednesday saw US indices close lower for the 2nd day in a row, as stock markets pulled back from their recent highs. The change in short-term trend was neatly captured by a break below the H1 Ichimoku cloud for the S&P500 and the market has made an overnight low of 2975.
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The break below the H1 cloud preceded a larger decline with the S&P500 dropping almost 50 points from the record highs seen at the start of the week. Source: xStation
On the data front there’s been a couple pieces out of note before the opening bell. First off, let’s look at the Philly Fed manufacturing index, which rose to 21.8 for the current month, up from 0.3 prior and comfortable higher than the 5.0 expected. This is the highest reading since October and means that 2 of the past 3 have come in better than forecast. At the same time the latest unemployment figures also hit, with initial jobless claims for the week coming in at 216k. This was in line with the consensus forecast and above the 208k prior (revised lower from 209k initially).
Regional surveys point to a recovery in US manufacturing with a combined Philly and NY Fed bouncing back of late. Source: XTB Macrobond
Longer term, the decline in equities has seen the S&P500 return back to trade in between the 8 and 21 EMAs. These two moving averages can be used in conjunction to identify the prevailing trend and with the shorter term (8) above the longer term (21) they presently indicate the trend is up. This has been the case for much of the year and while they have been in this positive orientation (8 above 21), several dips back to the zone around them have provided nice buying opportunities. Potentially key levels to look to on the downside for possible support are the daily low of 2975 and the 2960 level that price broke up from at the start of the month.
US stocks have pulled back to the 8/21 EMAs in recent trade. Is this a buying opportunity or is there more downside to come? Source: xStation
