S&P500: $2 trillion might not be enough

The US stock market falls in the pre-opening, possible reaction of fear to the size of the aid package approved by Congress.
Yesterday the 23% level of the Fibonacci retracement system was conquered, level drilled down now.
Record-breaking market rise scored yesterday, daily gains not seen for almost a century.

Tomas Salles FXStreet

A few hours before the opening of Wall Street, the S&P500 is losing the levels it gained yesterday. This market is highly emotional, as demonstrated by the intraday volatility.

Yesterday's strong bullish rebound reached the 23.6% Fibonacci retracement level from historical highs for the S&P500. In the hours leading up to the opening, and despite the $2 trillion plan approved by Congress, the markets are losing levels and falling back with some intensity.

The MACD and DMS indicators in the daily range show that there is no bullish setup for the moment, but rather that yesterday was important but not sufficient.

On the 1-hour chart, the short and mid-term moving averages are losing their downward profile, while the SMA200 remains in a downward direction.

This setup leads us to expect, in the short-term scenario, an attempt to build a technical floor. This should be a fragile floor though, as long as the higher time frames don't improve its aggressive bearish profiles.

The MACD on the hourly chart shows clear intentions of a downward direction, while the DMS shows the bears trying to regain the lead for today's session.

The current market situation makes it advisable for traders to be cautious in any time frame. Excessive leverage or positions without reliable stop levels can lead to significant losses in either direction.

Author

Tomas Salles

FXStreet

Tomàs Sallés was born in Barcelona in 1972, he is a certified technical analyst after having completing specialized courses in Spain and Switzerland. He expanded his technical training following the guidance of great experts on the financial markets.

GBP/USD flirts with tops near 1.3470

GBP/USD manages to regain composure and challenge the area of daily highs around 1.3470 on Friday. Cable picks up pace despite marginal gains in the Greenback in a context of swelling geopolitical tensions and rising global oil prices.

EUR/USD trims losses, back above 1.1500

EUR/USD picks up some pace and bouces off earlier lows, reclaiming the 1.1500 threshold and beyond at the end of the week. The pair’s modest pullback follows a persistent risk-averse market mood and renewed buying interest for the US Dollar.

Gold: The $4,000 mark holds the downside for now

Gold faces renewed selling pressure, falling sharply toweard the $4,000 mark per troy ounce as the US Dollar regains momentum. Escalating US-Iran tensions are keeping inflation concerns and expectations of further Fed rate hikes alive, weighing further on the yellow metal.

Bitcoin eyes 50-day EMA breakout, Ethereum consolidates, XRP steadies

Bitcoin, Ethereum, and Ripple trade near key technical levels on Friday as the broader cryptocurrency market pauses following last week's recovery. BTC is approaching the 50-day Exponential Moving Average while ETH continues to consolidate between two major EMAs.

Warsh needs to restore his reputation

We were glad to see our deeply negative reaction to the Warsh press conference was not some personal peculiarity. Just about everybody in the financial press felt the same way. The consensus is building it’s not the Fed in the dog-house but only Warsh. Today the WSJ changed it tune and blasted Warsh—"the honeymoon is already over..”

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.