FTSE 100, Dax and S&P 500 stabilise after selloff
Indices endured sharp falls yesterday, with many wondering if there is more to come after the strong gains of August for the likes of the S&P 500.
FTSE 100 edges up in early trading
The FTSE 100 suffered a sharp fall yesterday, building on the declines seen in the second half of August. It has recovered off the overnight lows, but with the downward move still firmly intact, the price will need to move back above 6000 to start suggesting that a new low is in place. Rallies towards 6000 that fail to maintain momentum may turn into fresh selling opportunities.
Dax stabilises around 13,000
Yesterday’s drop took the Dax back to support at 12,900/13,000. For now this area is holding, so we may see continued tentative bullish momentum for the time being. A close below 12,800 reverses this view and puts the index on notice that further falls may be ahead. Continued price action above 13,000 should see another push towards 13,450 and higher.
S&P 500 reverses to ten-day low
After the unstoppable rise comes the swift fall in S&P 500. But it is hard to tell what comes next. Previous selloffs since April have lasted two or three days, and with a US bank holiday on Monday and NFPs today traders may be disinclined to jump straight back in. Given the lack of downward price action of late yesterday’s drop was probably a necessary corrective, and already buyers are stepping back in. If the price drops below 3390 then the view will change to an expectation of some more near-term weakness, but continued price action above 3420 and a defence of yesterday’s low would help the bulls to retain control.
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