CFD Indices – Uncertainties Over Economic Recovery Halted Wall Street Rally

Market News

  • Wall Street lost ground on Thursday, with the S&P 500 and the Nasdaq pulling back from record closing highs in a broad sell-off driven by uncertainties surrounding the pace of the U.S. economic recovery. The Dow’s economically sensitive transports plunged 3.3%, its biggest daily drop since October.
  • The bond market is reflecting that the probability of there being material inflation over a long period of time is very unlikely, and that’s the fear that had been driving yields higher before the recent rally, said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York.
  • On Wednesday, the U.S. Federal Reserve released minutes from its latest monetary policy meeting, which showed the central bank does not yet believe the economy has fully recovered, yet a debate on tightening policy has begun in earnest.

Market Views

  • Stocks in Asia Pacific were mixed on Friday morning as confidence took a beating over the global spread of the Delta virus variant and worries it could stall a worldwide economic recovery. Hang Seng index rose 180 points while Nikkei 225 index fell 487 points.
  • On the COVID-19 front, Pfizer will request FDA emergency use authorization for a third booster dose of its COVID-19 vaccine co-developed with BioNTech. The companies are confident that the booster shot will offer protection against the Delta variant of the virus.

Dow Jones Index
(CFD Symbol: US30)
Trend :
Recommendation : Long@34,400
Last : 34,328
Target price: 34,800
Protective stop: 34,100

This index hit the resistance zone for the third times last Friday, but was unable to penetrate above this resistance zone, leading to a price correction. Price is testing the 20EMA now and a further violation of the 20EMA would hint for deeper correction. Stochastic is falling now but MACD has turned bullish.

Trading Idea
Buy 34,400 for 34,880 with a stop below 34,100. Entry was filled on 8 July.

Hang Seng Index
(CFD Symbol: HK50)
Trend :
Recommendation : Long @ 27,850
Last : 27,273
Target price: 28,700
Protective stop: 27,400 Triggered

This index broke and closed below the lower end of the rectangle consolidation zone that started since March 2021. If price cannot climb back inside the consolidation range within 3 days, we could see more downside ahead. Stochastic is at the oversold region and MACD has turned bearish.

Trading Idea
Buy 27,850 for 28,700 with a stop below 27,400. Entry order was filled on 7 July. Stop was triggered on 8 July

Nasdaq 100 Index
(CFD Symbol: USTEC)
Trend :
Recommendation :
Last : 14,686
Target price :
Protective stop:

Price reached a high at 14,892 on 7 July, which is also the Fibonacci 161% projection level. A Bearish Engulfing candlestick pattern was seen last night, hinting at possible top. We are likely to see a price correction towards the 20EMA at 14,440 or even lower at the trendline support at 14,250. Stochastic is currently in the overbought region. MACD is still bullish but has been given divergence warning.

Trading Idea
Wait for better trading idea.

S&P 500 Index
(CFD Symbol: US500)
Last: 4311
Target price:
Protective stop:

Price broke out from the Triangle chart pattern on 25 June. It is now having a price correction and price is sitting at the 20EMA support, which is also the upper Triangle trendline support at 4289. If price can sustain at this support, we are likely to see price resuming its upward movement. Stochastic is falling now. MACD remains bullish.

Trading Idea
Wait for better trading idea.

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