22.05.2019 – Special report. The indecision on the US stock exchange has been palpable over the past few days. The chart technique is visible proof of this: Wall Street, with all its important indices, is trapped in no man’s land between the moving 50-day average and the 200-day line. The indices won’t remain there forever – soon it’ll be hopping or topping.
No crisis clarification in sight
One step forward, one step back – global trade is waiting for a clear announcement in the various crises. The decisive topics were and are the customs dispute between China and the USA as well as the boiling up of the Iran crisis with potentially violent effects on the global oil market. According to a survey by Reuters/Ipsos, 51 percent of Americans expect a military conflict in the coming years. This is eight percentage points more than in a similar survey in June. Enough sugar in the tank to make the stock market engine stutter.
Caught between 50 and 200-day line
As a result, both S&P 500, Nasdaq 100 and Nasdaq Composite have slipped below the 50-day line in past sessions. And here all indices on the daily candle chart hang above the 200-day line, which acts like a magnet on prices from below. Most of all, the high-tech indices are still defending themselves against the downward pull.
Particularly strong skepticism in Dow Jones
The Dow Jones Industrial showed the least resistance to the pull: Earlier than the other indices, it entered the region between day and night.
The index has now relatively clearly marked the 50-day line as the upper resistance, from below the 200-day line serves as support. What does that tell us? Clearly, investors in the old economy are far more risk averse than colleagues who invest in high-tech. No wonder, they are more dependent than others on solving political crises. Keywords are tariffs, fair trade, booming domestic economy.
Sideways step, joy fireworks or crash
This raises the question of how things could continue. Sometimes the indicators leave the terrain of the undecided quite unspectacularly with a sideways movement. But sometimes not – a big bang and a fall into bear territory is the second variation. A loud cry of joy and an outburst upwards into the bull region is the third possibility.
So be sure to keep an eye on the regular market updates on your trading system in the coming days. And even more attentively than before. A decision on the American stock exchange and in global trading is in the offing. There are enough topics that trigger either a buying frenzy or a bear market.
The Bernstein Bank wishes you every success with your trades!
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