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Forecast and levels for S&P 500 - page 7

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In the pre-opening, the European markets negotiated with a negative tendency. OPEC's decision to extend the reduction in oil production for nine months has somehow disappointed financial market players hoping to announce additional cuts in output. This sentiment immediately triggered a drop in oil prices and a deterioration of investor sentiment. With no economic indicators on the agenda today, investors will follow the G7 meeting in Sicily, Italy, which will cover issues such as trade and climate change.
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The North Korean nuclear and missile program continues to be a major issue as the country faces increasing pressure from the US and China on its missile test program. This was the 9th missile test conducted this year.
Sergey Golubev
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Press review

Sergey Golubev, 2017.05.30 08:19

S&P 500 and Dow Jones: traders remain short (based on the article)

S&P 500 daily price was on the secondary correction and it was bounced from 2354 support level to below for 2418 resistance level to be tested. Anyway, the bearish divergence is appear on the daily price, while the ascending triangle pattern was formed for the price to be crossed to above for the bullish trend to be continuing. Strategy: stay neutral.


Dow Jones price is located above Ichimoku cloud in the bullish area of the chart: the price is on ranging within the following s/r levels:

  • 21070 resistance level for the bullish trend to be continuing, and
  • 20379 support level for the secondary correction to be started.

  • "Our data shows a massive 83% of traders with open positions in the US 500 remain short, while positions on the Dow Jones-tracking ‘Wall Street’ contract stand at 85% short and FTSE 100 at a near-record 90% short."
  • "The major caveat is nonetheless simple: price and sentiment extremes are, by definition, only clear in hindsight. If we look at past incidences of such one-sided positioning it seems clear they precede key turning points: the S&P 500 and Dow Jones reversed lower through early March when sentiment hit over 80% short (below 20% long). Of course sentiment remained at least 80% short for over a month as both indices continued onto fresh record highs. It remains impossible to identify the true sentiment extreme, and caution is advised against joining ‘the crowd’ as they sell into equity market gains."


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Asian stock markets ended in different directions in a session where the Chinese and Hong Kong markets were closed. Retail sales in Japan were up 3.20% from the previous year, an increase higher than expected (2.30%).
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In the pre-opening, the European markets traded slightly lower. Despite the encouraging economic data published on the Chinese economy, the European political landscape continues to be a source of concern for investors, particularly in the UK, given the forthcoming elections scheduled for 8 June. The latest polls suggest that in these elections Prime Minister Theresa May may lose the majority in Parliament. In recent days, her margin over the Labor Party has been narrowing. Theresa May called these early elections to strengthen her parliamentary position and could thus have more power in the Brexit negotiations. Consequently, the Pound depreciated against the major currencies. In sectoral terms, producers of raw materials and the banking sector should be closely monitored.
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In the pre-opening, the European markets traded with gains. On this first day of June, and just a few days before the UK elections, politics remains one of the topics that most attracts the attention of investors. In fact, the issue of European integration is a subject that remains on the agenda, so the interventions of some of the heads of the European Central Bank will be closely monitored. The European Commission presented yesterday a discussion paper on the deepening of economic and monetary union, which proposes that an agreement be reached by 2019 on the two remaining mechanisms to complete the banking union: the single bank resolution fund and the fund European deposit guarantee. In addition, the oil price trajectory has also been monitored at a time when, according to Reuters, concerns remain that production cuts agreed by OPEC are being hampered by the various countries that are excluded from the agreement. Yesterday, the price of this raw material reached a minimum of three weeks, after Libya increased production. In sectoral terms, commodity producers and the banking sector will continue to be the focus of investors.
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In pre-opening, European markets traded on a positive note as investors wait for the publication of the US employment report and digested Donald Trump's pulls out of global accord on Climate Change, thereby making the US one of the three countries , Along with Syria and Nicaragua, which are out of the accord. This exit from the accord will not be immediate, and the process of untying should not be completed before November 2020, the same month that should go to votes for his re-election.
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Last Friday, US stock indexes reached new highs, although the employment report was less encouraging. The Labor Department has revealed that the US economy has created only 138,000 jobs, compared to the forecast of 180,000. The unemployment rate fell from 4.40% to 4.30%, thus reaching the lowest since 2001. Also the value of April was revised downwards from 211 000 to 174 000. In reaction, the Dollar lost value in relation to the main currencies, especially against the Euro. On the other hand, average hourly wages increased by 0.20% over the past month and by 2.50% year-on-year. This report has revealed a certain slowdown in the labor market, which may give rise to some fears about the country’s economic performance, which in the first quarter had been lower than estimated.
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European markets ended down, with investors waiting for the UK elections and the ECB meeting.
Most sectors finished lower, with pharmacists among the worst performing performers after Roche had disappointed the market with the result of a test for a particular treatment. Roche shares fell more than 5%.
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In pre-opening, European markets traded with different fluctuations, on a day that would naturally be characterized by an expectant attitude towards tomorrow's events that could certainly influence financial markets: the UK elections and the ECB meeting . In the more microeconomic field, the banking sector will attract attention, due to the news about Banco Popular. In the long run, equities are influenced almost exclusively by the evolution of corporate profits and interest rates. Most likely, the recent appreciation of European equities is due to an intrinsic factor, in particular to capital flows that continue to flow into Europe. According to Merrill Lynch Bank of America in May, American savers subscribed about 15,000 M.USD in European shareholder funds, to the detriment of US specialized stock funds. As long as these subscriptions are not discontinued, European markets will continue to benefit from this support element.
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