Market Recovery Should Be Used for Additional Sell Operations
The last two trading days showed that negative expectations were correct. U.S. stock indices are struggling. The Dow Jones fell by 1.92% to 33919.84 and the S&P 500 broad market index lost 1.77% to 4354.18 compared to Friday’s closings.
Today, Wednesday, is the F-day as the Federal Reserve (Fed) is expected to announce its monetary policy guidance with a possible schedule of stimulus tapering and dot plot interest rates projections. Although investors expect the Fed to announce bond buying program tapering likely in November during its next meeting as the incoming macroeconomic data seems to be strong, any allusions towards timing and pace of the tapering in the FOMC protocol, or during the follow-up press conference of Fed’s Chairman Jerome Powell, will certainly affect markets.
U.S. stock indices futures indicate rather a negative scenario for the stock markets. So, if no surprises come up due to the Fed, stock markets may have a reason for a rebound. The technical picture confirms such a possibility. For example, the Dow Jones index reached a strong support level at 33472 after a decline from July. So, it would be no surprise if it rebounds towards the moving average of EMA100 on the daily chart to 34420 points. There is also a gap in the 34312.14-34584.88 area that would act as a major resistance. As to the S&P 500 index, its recovery to the 4415-4430 area would look like a retest of the previously broken support level that is now acting as a resistance. The gap at the 4402.95-4432.99 area also duplicated the above mentioned zone.
However, after such rebound the U.S. stock indices are likely to continue their downward decline according to a number of technical indicators on elder weekly timeframes. Anyway, buying current dips could be extremely dangerous as risks of the downward correction development in the coming days or even weeks are too high and are still intact.
Today, Wednesday, is the F-day as the Federal Reserve (Fed) is expected to announce its monetary policy guidance with a possible schedule of stimulus tapering and dot plot interest rates projections. Although investors expect the Fed to announce bond buying program tapering likely in November during its next meeting as the incoming macroeconomic data seems to be strong, any allusions towards timing and pace of the tapering in the FOMC protocol, or during the follow-up press conference of Fed’s Chairman Jerome Powell, will certainly affect markets.
U.S. stock indices futures indicate rather a negative scenario for the stock markets. So, if no surprises come up due to the Fed, stock markets may have a reason for a rebound. The technical picture confirms such a possibility. For example, the Dow Jones index reached a strong support level at 33472 after a decline from July. So, it would be no surprise if it rebounds towards the moving average of EMA100 on the daily chart to 34420 points. There is also a gap in the 34312.14-34584.88 area that would act as a major resistance. As to the S&P 500 index, its recovery to the 4415-4430 area would look like a retest of the previously broken support level that is now acting as a resistance. The gap at the 4402.95-4432.99 area also duplicated the above mentioned zone.
However, after such rebound the U.S. stock indices are likely to continue their downward decline according to a number of technical indicators on elder weekly timeframes. Anyway, buying current dips could be extremely dangerous as risks of the downward correction development in the coming days or even weeks are too high and are still intact.
