S&P 500 index walloped, but is it washed out?
U.S. equity index futures green: S&P 500 up ~0.8%
Initial jobless claims 220k vs 230k est; Q3 GDP final > est
Euro STOXX 600 index down >1%
Dollar falls; gold, crude, bitcoin gain
U.S. 10-Year Treasury yield rises to ~4.54%
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S&P 500 INDEX WALLOPED, BUT IS IT WASHED OUT?
U.S. stocks plunged on Wednesday, with all three major indexes posting their biggest daily decline in months, after the Federal Reserve cut interest rates by a quarter of a percentage point, but disappointed some investors with projections that signaled a more cautious path of easing next year.
Since tagging a long-term resistance line earlier this month, which is around 6,100 in December, the S&P 500 index .SPX, which ended at 5,872.16 on Wednesday, has now sold off 3.73% from its 6,099.97 record intraday high and 3.58% from its 6,090.27 record close.
The next support is at the Nov. 15 low which was at 5,853.01.
The rising 20-week moving average (WMA) is now around 5,775. Since reclaiming the 20-WMA on a weekly closing basis in early November 2023, the SPX has not registered a weekly close back below it.
The Nov. 4 low was at 5,696.51.
The 10-WMA, which is now around 5,930, presents an initial hurdle on the upside.
Meanwhile, even though the S&P 500 index has only sold off about 3.6% from its high on a closing basis, the percentage of S&P 500 stocks trading above their 50-day moving average has already plunged to a more than one-year low:
It's now down to 18.7%, which is its lowest level since a 14.1% reading on Oct. 30, 2023, which was just one trading day after the benchmark index concluded a 10.3% decline on a closing basis from its July 2023 peak.
Admittedly, this is just one measure that can potentially flag that the market is ripe for an imminent rally, or indeed, a significant low, but amid a sudden jump in volatility .VIX, traders are eyeing these sorts of internal strength measures closely.
Breaking its March 2023 trough at 17.3% could see this measure continue down to the 10% area or lower. Its pandemic panic low was at 1.4%, and in the days before the end of the 2022 bear market it hit 3.3%.
(Terence Gabriel)
*****
FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:
HERE COMES THE BOE - CLICK HERE
GOLD: STILL A GOOD CHRISTMAS GIFT - CLICK HERE
FED SENDS STOXX 600 TO NEAR THREE-WEEK LOW - CLICK HERE
EUROPE BEFORE THE BELL: FUTURES SLIDE ON FED OUTLOOK - CLICK HERE
JAPAN HOLDS, BANK OF ENGLAND UP NEXT -CLICK HERE
SP500stocksabove50DMA12192024 https://tmsnrt.rs/4glHBbR
(Terence Gabriel is a Reuters market analyst. The views expressed are his own)
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