Market Sell Off Leads to Another Record Close this Week
Equities took a hit on Tuesday, as the S&P 500 dropped over 1.5%. But the bulls used that as an opportunity.
This selling quickly reversed into the end of the session and markets found their way to fresh highs once again. Dow Jones hit 26,000 this week as the S&P 500 climbed over 2,800 for the first time ever.
As the week wore on, the S&P 500 consolidated, before finishing the week at a record high on options expiry.
Here is an intraday breakdown of last week’s price action on S&P 500:
Weekly Stock Market & Sector Overview
Top Chart – Stock Market Sectors
- Technology is up 1.44%
- Financials up 1.03%
- Retail up 0.98%
- Utilities down 0.52%
- Energy down 1.32%
Bottom Chart – Markets Overview
- S&P 500 up 0.79%
- US dollar down 0.30%
- Gold down 0.54%
- Silver down 1.45%
- Oil is down 1.37%
US Government is Officially Shut Down
This past week, the House passed a stop gap funding bill to prevent a government shutdown.
However, the Senate was not able to come to agreement, which officially puts the US government in a shut down mode. This means some branches and offices of government will not be functioning come Monday morning.
Overall this means that the US is out of money and can’t pay all the bills.
Ultimately, this is not extremely bearish for the stock market in the short term. The real issue is how long it will take for law makers to pass a budget. They are very far, far away from agreeing.
Overall, the S&P 500 has slipped an average of 0.94% during previous government shutdowns.
The US dollar is dampened by the news, and remains very vulnerable and weak as a result. We see a pullback to the 91.50 to 92.00 area, but are ultimately bearish in the medium term.
Bitcoin Crashes, But is This a Buying Opportunity?
There has been a lot of attention on potential regulations implemented in China and South Korea. Both are massive markets for cryptocurrencies, and Bitcoin in particular.
When China announced they would also look to ban trading on crypo exchanges, all crypto currencies crashed hard.
However, Bitcoin in particular could be trading at a key support level, which could be a low risk buying opportunity.
Below you will see our technical analysis chart, with price action hitting the 3rd and final support level last week.
Here is the technical analysis confirming support:
- Price hit the 3rd and final Fibonacci confluence zone (green below)
- Momentum bearishness is slowing down, primarily by momentum indicator
- Price is now trading at the 100 day moving average, with buyers showing up
- Friday’s sell off did not happen on very high volume
Now I am not saying it’s time to get a mortgage on your home and buy Bitcoin, but this could be a very low risk entry for anyone looking to get exposure to Bitcoin. But remember, you have to manage risk – always use a stop loss.
Weekly Economic Calendar
This week we will be fairly quiet in terms of economic news.
Monday we will see the latest monetary report from the Bank of Japan (BOJ). Expect to see volatility in the Japanese Yen and other correlated currencies.
Tuesday in the very early morning, the Bank of Japan will host their latest press conference. We will also get a look at the API oil inventory data, which has been slightly bearish lately.
Wednesday we will see the weekly crude oil inventory numbers from the Department of Energy (DOE).
Thursday will be all about the European Central Bank, with an important interest rate announcement. The press conference in the morning will cause significant volatility in the EURO currency, along with the US dollar.
Friday is the all important advance GDP number in the US, which is an early look at economic growth. The expectation is for a slight contraction from the prior quarter, and traders will be watching this number very closely.
That’s it for this week.
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