📈US100 bounces back above the 100-day EMA

Wall Street stocks are finally returning to growth after a nervous start to the session, benefiting from a sharp drop in oil prices and hopes for the possible use of strategic reserves by IEA/G7 countries. Indices are recouping their morning losses related to the escalation of the war with Iran and attacks on oil infrastructure, with investors beginning to reposition themselves for a shorter conflict and less risk of a lasting supply shock.

The Dow Jones is up about 0.5%, the S&P 500 is up 0.4%, and the technology-focused Nasdaq Composite is up 0.6%, reflecting improved sentiment after Monday's rebound from the "war low." Brent's decline below $90 eases concerns about a further jump in energy costs and fuels a rotation from defensive to riskier assets, including growth companies represented by the Nasdaq 100. At the same time, the announcement of an extraordinary IEA meeting and signals of readiness to release reserves act as a "safety net" for the stock market, even if physical supply disruptions from the Strait of Hormuz remain a real threat to the stability of the oil market.

For the third time in the last 10 months, the US100 is defending the 200-day EMA zone, and today's upward momentum is pushing the contract above the 100-day EMA. In the medium term, this means that the upward trend defined by these curves remains intact. Oil will be key for further US100 trading, as it is the main factor reflecting fears about the ongoing conflict in the Persian Gulf. The chart below shows the inverse correlation between US100 and OIL seen in recent days.

Source: xStation