The slump seen so far today could be the prelude of a really ugly period for stocks
Despite plenty of action to begin with, the main act in trading today is yet to begin its performance. All eyes will turn towards the US cash equity market as risk sentiment continues to sour and once again, attention will be payed to the S&P 500 index.
As mentioned several times in the past, the pair has still narrowly escaped two consecutive daily closes below the 200-day MA (blue line) since early 2016. But given the performance of E-minis as we begin the day, traders are starting to give up on the level after the recent back and forth tussle:
E-minis are down 1.1% at the moment and there doesn’t appear to be much turnaround on the cards as we get into European trading now. The year’s low for the S&P 500 index sits at 2,710.51. If that level gives way in trading today, things will start to turn really ugly, really fast for equities and that will exacerbate the risk off sentiment in markets further – fueling further bids in the Japanese yen.