• US stock markets have re-opened after the long weekend in the red
  • Coming days could prove pivotal for indices
  • US500 in between EMAs and Fibs

The US session has begun with stocks coming under some pressure this afternoon as traders return from their long weekend celebrating Presidents’ day. Last week was a relatively pleasing one for the US with gains seen in all US indices after the recent declines but the markets remain at interesting levels. 

We earlier looked at the relationship between real yields and the US500 and concluded that contrary to popular belief there doesn’t appear to be a strong negative correlation between the two

The US500 is lower on the day by around 0.35% on the Wall Street open and this market is currently sat at a potentially pivotal level. First off let’s look at the market from a trend identification point of view. The 8 and 21 EMAs on a D1 chart printed a negative cross (8 below 21) earlier this month and this signal indicated that the uptrend seen since lat last summer had come to an end. A bullish cross (8 above 21) preceded the prolonged move higher which lasted 4 to 5 months and this negative cross could now be seen to suggest a sustained move lower. Price moved back to test the 21 EMA late last week but failed to make a clear move above it and currently the market trades in between these two moving averages. 

 link do file download link

 The US500 has printed a negative cross which could be seen to be indicative of a downtrend. Source: xStation

Looking more at the size of the recent decline, Fibs can offer potential support and resistance levels to keep an eye on. The drop from the all-time high at 2880 to the double bottom at 2531 has seen more than half of the declines recovered in the subsequent trade. Price is currently sat between the 50% fib at 2706 and the 61.8% at 2747 and the market appears to be consolidating here before its next move. A clean break out of this range could well provide the trigger for this move. 

link do file download link

 The market is currently sat between the 50% and 61.8% fibs of the decline at 2706 and 2747 respectively. Source: xStation