Once again the American stock market closed lower yesterday but the session was particularly interesting and may have given clues about what may happen in the coming days. The session yesterday had several features in common with what is called a day of capitulation. A day of capitulation, which usually occurs after a prolonged decline in the markets, is characterized by a negative start and that is further aggravated by a spiral of sales, with high volume. This spiral of sales is due to the fact that tolerance to loss of most investors is exhausted. These investors after suffering sharp losses in the previous days, decide, emotionally, sell their portfolios at any price. Thus sales of some investors cause sales of others. When this movement leads to extreme prices, many hedge funds, who held positions vendors in the market, start to buy them.
SP 500 Hourly chart:
Yesterday the North American indexes ended the session almost unchanged, rebounding from losses earlier in the session, a movement that seems to have been purely technical, since some titles were already oversold. In the European market, the situation was quite different, with the major indexes declining more than 2%, as investors react negatively to ECB President Mario Draghi’s speach, on concern the European Central Bank asset-buying plan won’t be enough to revive growth.
As investors assess the strength of the U.S. economy, analysts are predicting a return to gains of more than 200,000 in monthly nonfarm payrolls.
SP500 Hourly Chart:
The S & P 500 index is losing strength and has ended the string of five weeks of gains, with the idea that the Fed will raise interest rates sooner than expected.
The rise in retail sales was in line with the predictions of many economists.
The consumer sentiment index rose to 84.6 in September from 82.5 in the previous month.
The central bank, which meets on September 16-17, informed that the reference rates will remain low for a considerable time.
The S&P 500 closed at historical maximum in September 05, after a rally of five consecutive weeks, the longest streak of gains of the year. The index did not show a single sequence of four days of losses in all 2014, and the last time it fell more than 10 percent was three years ago.
Major industries in the S&P 500 fell today. Oil prices dropped on concern that global oil demand is slowing.
U.S. stocks are ranging after the adoption of sanctions against Russia from the European Union.
The last “Momentum”, which have been fueled by profits that topped analysts’ estimates, is slowing down.
Today, the trading volume was relatively high in the SP500.
The geopolitical risk remains high but corporate profits have supported the valuations in the main Indexes.
The leading World Index SP500 fell today confirming the strong bearish pattern from last week.
FTSE100 and Dax30 also declined mainly after the opening of the american session.
Gladly my short target in Dax was reached today (9536.5). 🙂
During the following days we might be presented with the so expected retraction in the equities Market.
The fall of the Amazon was crucial to the behavior of the markets during the day and the good news of the “Durable goods orders ” weren’t able to hold the stock prices in the Major Indexes.
It’s incredible how this Index rise and the market don’t care about bad financial or geopolitical news.
The earning season and the FED are boosting the stock market and it doesn’t even pause to rest.
It has been said by several experts, that SP500 has still more space to rise, at least until 2150/2200.
The famous and expected retracement is still to came.
I’ve to be honest, I miss a good short. 🙂