S&P 500 (SPX) to fall on Apple woes, China protests, profit-taking

S&P 500 looks set to open lower as risk-off spreads from China.
Apple looks lower in premarket on Foxconn China woes.
Ranges remain tight as investors grapple for direction.

Ivan Brian FXStreet

Equities in Europe and Asia took fright at developments in China over the weekend. The Hang Seng closed 1.6% lower, and the Dax and Eurostoxx are down nearly 1%.

S&P 500 news

US equities are set to open lower as a wave of bad news buffets stock markets. China is in a lockdown mess, which is affecting oil prices as they power lower. Normally, this would be seen as bullish for equities as lower oil means cheaper inputs and lower inflation. However, the situation in China is affecting corporate America and is making for serious headwinds for the likes of Apple (AAPL) and Tesla (TSLA) who both have strong operations in China. Both are heavily weighted in the main US indices, so underperformance here makes gains harder.

We have mixed and confusing views from retailers about how Black Friday has gone. Initial reports looked bullish, but over the weekend we have had several notable negative reports. Later today we get words from uber Fed hawk Bullard that are likely to be ignored by markets given he spoke of 7% rates last time out. On Wednesday though we get Powell, and he will carry more weight. I expect him to remain hawkish and try to dampen recent enthusiasm.

S&P 500 (SPX) forecast

4,000 is the intraday pivot with the market going to negative gamma below that level. Ranges remain tight, so market makers remain in control of the short-term direction. Negative gamma means market makers sell the S&P 500. 4,030 will be intraday resistance, and below we see the move likely to test 3,900. Above 4,000 and the 200-day moving average at 4,055 is the next big resistance on the daily chart.

SPX daily chart

Author

Ivan Brian

FXStreet

Ivan Brian started his career with AIB Bank in corporate finance and then worked for seven years at Baxter. He started as a macro analyst before becoming Head of Research and then CFO.

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