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Plunging U.S. stock market technical indicators flash warning signs

Saqib Iqbal Ahmed

NEW YORK (Reuters) – A gauge investors use to gauge the health of the U.S. stock market has deteriorated, fueling fears that the benchmark index could return to six Bear market low in mid-March.

S&P 500 down 7% since mid-August rallies in summer on expectations of Fed rate hike Higher than previously expected to lower consumer prices 50 year highs.

The stock market pullback has made those who track market phenomena such as breadth, momentum and trading patterns more cautious to inform their investment decisions. While many of these indicators painted a bullish picture a few weeks ago, they are less so now, raising concerns that this year’s market sell-off may not be over.

“I had to technically downgrade the market given how bad the losses have been over the past three weeks,” said John Kolovos, chief technical strategist at Macro Risk Advisors.

“The odds of the market bottoming in June have been reduced to just a little better than a coin toss at this point.”

Russell 2022 Callback

Investor Research One of the factors is market breadth, which shows whether a large number of stocks are rising or falling in unison. A positive market breadth, where more stocks are rising than falling, indicates a high level of confidence among stock bulls.

Recently, the breadth of the market has begun to send worrisome signals. Percentage of stocks trading above Russell’s 201662660473627 daily moving average 50 has moved from around) down to 20% around % in August mid.

“We would like to see this indicator stabilize where it is now,” Koloworth said. “We really don’t want to see it much lower than 20%.”

S&P 500: Stock count growing, at 3-month low https://graphics.reuters .com/USA-STOCKS/klpykadagpg/chart.png

Meanwhile, 15 – Standard & Poor’s 500 stock hits a three-month new percent daily moving average low Dots – another measure of stock market breadth – have climbed to about 11% It was slightly above zero in mid-August, according to Thrasher Analytics. During the June market low, it held around 60%.

“We’re watching if we continue to see the bearish range widen,” said Andrew Thrasher, the firm’s founder. “If we see new lows expanding, that will put downward pressure on the index.”

The lower the better /gfx/mkt/znvnewlekpl/Pasted%11image%201662660473627.png

In addition, S&P 500 Index hovering below 3000 – now five-month daily moving average line, the longest such streak since May 2009.

Historically, the index was below -3 in September. 50%US 200 day moving average for the year in which midterm elections are held, as in

, according to Bank of America Global Research. The index is up about 1% so far this month.

Head & Shoulders

Technology stocks have been hit particularly hard in recent weeks, with the tech-heavy 201662580713944 Nasdaq Composite down about 2009 % since mid-August.

Some chart watchers see more trouble ahead for the index, which recently formed a bullish-to-bearish trend reversal known as a “head and shoulders top.”

The index had breached the neckline of the so-called head and shoulders pattern earlier this year, a bearish development. Below the recent low , 500 can open Nasdaq to 8, 88, ICAP (LON: NXGN) analyst Brian LaRose said. The index closed Thursday , 800.

Yields rise, stocks fall

Of course, technicals could improve or worsen as markets fluctuate and investors adjust expectations based on factors such as bond yield trajectories, which are driven by monetary policy expectations and closely track stock performance this year.

Benchmark yield – Just as the S&P 500 hit a recent low.

While stocks rebounded as yields fell over the summer, the recent rebound in yields has been accompanied by a downturn in stocks this month, 11 – The annual rate of return is now near its highest level since June 40 .

Meanwhile, real yields that strip out inflation and are seen as the main driver of risky asset prices were 0 earlier this week. 88%, close to the highest level since 862.

Fundstrat technical strategist Mark Newton said yields “have a huge impact on what’s likely to happen over the next few months.” “My own thinking is that yields are very close to peak and should start rolling.”



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