US indices hit by profit-taking

…But the trend remained bullish ahead of key earnings and central bank meetings

US indices struggled to shake off the early weakness as European markets closed for the day. However, “profit-taking” was written all over the markets, rather than anything significant. For, there was no major catalysts behind today’s sell-off. Indeed, the selling pressure was relatively mild, and the major indices holding within recent ranges at the time of writing. So, despite the weakness, I wouldn’t rule out the possibility for a late day rally, like we have seen on numerous occasions in recent weeks.

With investors keeping a close eye on the big macro events taking place later this week, as well as the key technology earnings results, traders were keen to figure out whether key support levels would hold as the major indices tested some interesting technical levels.

The tech-heavy Nasdaq 100 had sold off the most, down as much as 1.8% earlier. But it remained to be seen whether the weakness would turn into a proper sell-off as the index tested key support and the 200-day average around 11920 area. A bounce here would confirm the bulls are in control, which may then inspire a breakout above the December high of 12215.

However, a daily close back below the 200-day would be a sign of weakness. Even so, we would still have to see a bit more of confirmation before declaring the bull trend is over. For now, we are giving the bulls the benefit of the doubt.

The Nasdaq will be in focus as we will have the latest earnings results from Apple, Amazon, Google owner Alphabet, and Facebook parent company Meta, among others.

Meanwhile the S&P was showing similar price action to the Nasdaq, but it too was trying to bounce off key support around 4022. This is where the index had found resistance earlier last week, before rallying in the latter half of the week.

But with the long-term bearish trend line broken and the 200-day average reclaimed, the bulls would remain happy for as long as the S&P doesn’t now create a new lower low beneath that 200-day average again.

The Russell looked the most interesting one to me as the bulls try to establish their control by causing a breakout above key resistance area circa 1900. So far, they have been unable to do so, but the way the index has been creeping higher of later, it wouldn’t surprise. Importantly, a breakout above 1900 would invalidate the bearish head and shoulders pattern, which in itself would be another bullish development.

So, despite today’s weakness, the technical picture is still looing constructive for the major indices. It is all about those central bank meetings and key tech earnings. For as long as the earnings are not too bad and/or the Fed and ECB are not too hawkish, that should keep the bulls happy.

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.