- The S&P 500 and the Nasdaq ended Tuesday trading in the red as worries that aggressive moves to curb decades-high inflation might tip the U.S. economy into recession dampened investors’ appetite for risk. The S&P 500 slipped 32 point and the Nasdaq was down by 270 point. The Dow Jones Index bucked the trend with a 48 points gain.
- Treasury yields fell to one-month lows after housing data pointed to a cooling economy as the Federal Reserve presses on with aggressively hiking interest rates to tackle soaring inflation. New home sales in the U.S. fell 16.6% month-on-month in April, the largest decline in nine years.
- Oil prices were mixed as tight supply worries offset concerns over a possible recession and China’s COVID-19 curbs. Prices fell after U.S. Energy Secretary Jennifer Granholm said U.S. President Joe Biden had not ruled out using export restrictions to ease soaring domestic fuel prices.
- Asia stocks opened mostly in positive territory on Wednesday even as global growth concerns and weak U.S. economic data weighed on Wall Street overnight. The Hang Seng index was up 128 points while the Nikkei 225 edged up by 17 points
- JP Morgan cut its forecast for China’s second-quarter gross domestic product to a decline of 5.4% from a prior forecast of a 1.5% decline, after disappointing data in April.
Dow Jones Index
(CFD Symbol: US30)
Recommendation: Long @ 31,150
Target price: 32,500
Protective stop: 30,700 Triggered
This index was capped by the falling 20EMA, leading to its falls and its violation of its previous low support. However, there is potential divergence warning the MACD indicator that is hinting of possible low. We see price rebounding to test the 20EMA and a break of this 20EMA is likely to lead to a test of 32,845.
Buy 31,150 for 32,500 with a stop below 30,700. Entry and stop orders were triggered on 20 May.
Hang Seng Index
(CFD Symbol: HK50)
Price rebounded from a low at 19,162. It is now testing its overhead downtrend line that capped price’s rally for a third times this round. It has to surpass this downtrend line for uptrend. Stochastic is rising but MACD is turning bullish.
Wait for better trading idea
Nasdaq 100 Index
(CFD Symbol: USTec)
This index is trading near at its previous low support zone. MACD is forming a divergence warning that is hinting of possible bottom. If price can maintain at this support level, we see price breaking out from the 20EMA to move higher to 12,500 initially and to 13,400 eventually.
Buy 11,750 for 12,500 with a stop below 11,400.
S&P 500 Index
(CFD Symbol: US500)
Price is currently trading near its previous low support zone with MACD giving a divergence warning that warns of possible index low. A Doji candlestick pattern is hinting at a reversal and if price can stay above this support level, we see price breaking out from the 20EMA to move higher 4130.
Buy 3910 with a stop below 3805 for 4130.