Potential US 500 Cash trade

In a pivotal week for US equities, global growth concerns remained the dominant theme as comments by Fed personnel centred on global growth and how it’ll affect the US.

US 500 Cash
Source: Bloomberg

Fed vice chair Stanley Fischer suggested a slower global growth could result in the Fed removing accommodation at a slower pace. Fed member Tarullo also expressed concerns about global growth, suggesting there was more downside than upside risk, which will have to be taken into consideration when setting policy. Fedspeak will remain a dominant theme this week, with Lockhart, Plosser, Kocherlakota and Bullard on the wires.

Looking for S&P buying opportunities

For the US, it certainly feels like ‘make it or break it week’, with the S&P testing the 200-day moving average after having traded above it for 472 consecutive sessions. Around 53 S&P 500 firms report Q3 earnings this week, beginning on Tuesday (activity is limited on Monday for the Columbus Day holiday).

Big financial names such as JP Morgan, Wells Fargo, Citi, BlackRock, BoA and Goldman, as well as non-financials like GE and Google all report this week. This will help give a better indication of growth from an earnings perspective and will set up expectations for the rest of the earnings season.

Given the momentum we’ve been seeing in US economic data, there is a good chance earnings will get off to a strong start. I am eyeing potential buying opportunities on the US 500 cash, given the S&P is testing significant support in the 1900 region, where the 200-day moving average also kicks in. However, given the price action has not quite shown the stability I’d want to see before buying, I’ll wait for some signs of a reversal before initiating a position.

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