- Wall Street tanked in a broad sell-off on Thursday, as investor risk appetite was dashed by worries that Fed’s restrictive monetary policy will remain in place for longer than anticipated. The Dow slumped 370 points, S&P 500 fell 72 points and Nasdaq Composite slid 245 points.
- On Wednesday, at the conclusion of its two-day monetary policy meeting, the central bank left the Fed funds target rate unchanged at 5.25%-5.50%, as expected. The revised economic projections showed interest rates will remain elevated through next year, dampening hopes for easing of policy before 2025.
- An unexpected 9% drop in initial U.S. jobless claims, to the lowest level in eight months, played into the Fed’s notion that the labor market remains too tight, putting upward pressure on wages, and the economy is resilient enough to withstand higher rates for longer.
- Asian stocks were mixed on Friday as markets continued to fret over rising interest rates, while Japan’s Nikkei trimmed some early losses after the Bank of Japan offered no changes to its ultra-dovish policy. Hang Seng index rose 190 points while Nikkei 225 index dropped 136 points.
- The BOJ kept rates at negative levels, and said it will continue with its current pace of stimulus, disappointing some investors hoping for any hawkish signals. Data on Friday showed that Japanese CPI inflation grew slightly more than expected in August.
Dow Jones Index
(CFD Symbol: US30)
Recommendation: Short @ 34,870
Target price: 34,400
Protective stop: 34,620 filled
This index broke down the triangle pattern yesterday. It is currently testing its previous low support zone. We could see a short term rebound from this support zone to the triangle trendline resistance at 34,440. Stochastic is at the oversold zone and MACD is bearish.
Sell 34,870 for 34,300 with a stop above 34,620. Entry and stop were filled on 20 Sept.
Hang Seng Index
(CFD Symbol: HK50)
Recommendation: Short @ 17,960
Target price: 17,420 filled
Protective stop: 18,100
Price has been moving within a falling channel that formed since Mar 23. It hit the lower trendline support that coincides with the previous low support zone. Price could rebound to 18,080 in the near term. Stochastic is rising but MACD is still bearish.
Sell 17,960 for 17,420 with a stop above 18,100. Entry and target price were filled on 21 Sept.
Nasdaq 100 Index
(CFD Symbol: USTec)
Price broke and closed below the channel. It appears to rebound from its previous low support zone. We could see price rebounding from this support zone to the 20EMA resistance point at 14,970. Stochastic is at the oversold zone and MACD is bearish.
Wait for better trading idea
FTSE 100 Index
(CFD Symbol: UK100)
Price is currently consolidating within a tight range between 7622 and 7746. It is likely to move within this range until either end is broken for directional movement. Stochastic is at the overbought zone and MACD remains bullish.
Wait for better trading idea