Last week introduced a new variable into the analysis: trade wars.
Not surprisingly, the markets declined. The bigger question is, now what?
Futures are forecasting another drop this morning. The question is, will the 100-day moving average hold support again? If not, we’re looking at the 200-day moving average. That’s a decline on the SP500 of over 4% from current levels.
Unfortunately, there’s little technical indication which scenario is going to play out. Given the continued shift in sentiment with ever-increasing anti-globalist policies out of the White House, the probability of a bigger sell-off is rising — even with decent overall fundamental economic data.
Look for a negative open today, with a lot of price volatility around the 100-day moving average. Should it hold, markets will likely reverse course and head toward 2775. Otherwise, we could be looking at another 150-point drop today.
Flip a coin as to which outcome we get… either way, this week should be a pretty good tell.
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