The BIG reversal ?

The law of gravity finally hit Wall Street today as the S&P 500 dropped 5.89% and closed back below its 200-day moving average.

Trading floor 2

The BIG reversal ?

The law of gravity finally hit Wall Street today as the S&P 500 dropped 5.89% and closed back below its 200-day moving average pressured by the Banks (-9.6%), Energy (-9.45%) and Automobiles & Components (-9.26%) sectors. The Dow closed down 1861 points or 6.9%.

Thursday’s trading saw all major U.S. indices confirm an island top reversal pattern after the formation of an exhaustion gap on the 5th of June and a downside breakaway gap that confirmed in today’s trading. 

The S&P 500 also confirmed a bearish Belt-Hold Line candlestick. The Japanese name for the belt-hold candle is "Yorikiri" which comes from a sumo wrestling term which means "Pushing your opponent out of the ring while holding onto his belt." Clearly, the S&P 500 got pushed off the top of a cliff in Thursday’s trading. 

The S&P 500 has now turned bearish from a technical analysis perspective. A close above the black bearish belt-hold line at 3130 should mean a resumption of the prior uptrend but for now, we look towards bearish price action to close the breakaway gap at the 2863 support level which formed on the 18th of May.

Here is a look at the S&P 500 Index below. 



Is it time to short equities? One day of negative price action may be hard to turn bulls into bears but have a look at one of our recent posts that digs a little deeper into some U.S. equities that have had some impressive rebounds. "Short Opportunities Abound as Euphoric US Stocks Take a Tumble"



Source: GAIN Capital, TradingView

More from Indices

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.