SPX - Eyeing the 200 MA - Market Update
The SPX appears to be heading for the 200 daily moving average, this comes after the index fell below the 89 ema and subsequently failed to regain the level after last night's close.
I am expecting to see a near-term relief rally at some point as markets don't like to move straight down or straight up for too long, that being said the technical picture looks rather bleak for the SP-500.
This latest selloff is reminiscent of the Q4 drop in 2018, both in terms of speed and magnitude of the drop, using this as a rough guide (the macro outlook for the two scenarios are very different mind you), this would suggest that a trip to the 200 daily moving average is very much on the cards.
I would most likely expect the bounce to occur at the 200 MA, if it is to occur, but the daily RSI is signalling an oversold condition for the SP-500 so a bounce could materialize at any point.
I have already covered the Macro picture for the SP-500 previously (initial claims, PMI, Yield curve etc.) and the outlook signals a global slowdown, no two ways about it, the Covid19 outbreak could certainly be the catalyst for a prolonged selloff and worst case, the global slowdown.
Will the Fed step in to alleviate the markets?
Most likely yes, but the question is when, the current futures for the March 18th FOMC meeting are pricing in a 36% chance of a rate cut, up from 6.6% just one week ago.
So stimulus is coming, but the question is whether or not more monetary stimulus can offset the global supply chain issues that Covid19 are having on the economy.
cmegroup.com/trading/interest-rates/countdown-to-fomc.html <----- FOMC Futures
I am expecting to see a near-term relief rally at some point as markets don't like to move straight down or straight up for too long, that being said the technical picture looks rather bleak for the SP-500.
This latest selloff is reminiscent of the Q4 drop in 2018, both in terms of speed and magnitude of the drop, using this as a rough guide (the macro outlook for the two scenarios are very different mind you), this would suggest that a trip to the 200 daily moving average is very much on the cards.
I would most likely expect the bounce to occur at the 200 MA, if it is to occur, but the daily RSI is signalling an oversold condition for the SP-500 so a bounce could materialize at any point.
I have already covered the Macro picture for the SP-500 previously (initial claims, PMI, Yield curve etc.) and the outlook signals a global slowdown, no two ways about it, the Covid19 outbreak could certainly be the catalyst for a prolonged selloff and worst case, the global slowdown.
Will the Fed step in to alleviate the markets?
Most likely yes, but the question is when, the current futures for the March 18th FOMC meeting are pricing in a 36% chance of a rate cut, up from 6.6% just one week ago.
So stimulus is coming, but the question is whether or not more monetary stimulus can offset the global supply chain issues that Covid19 are having on the economy.
cmegroup.com/trading/interest-rates/countdown-to-fomc.html <----- FOMC Futures
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