The main US stock markets closed down yesterday and the Futures overnight have continued to consolidate. There are a number of influences coming together in the next week that could cool the Trump trade significantly. There are uncertainties’ beginning to appear on US trade enforcement and there is a weakening on G-20 statements regarding protectionism. Plus the upside risk to the non-farm payrolls data on Friday (consensus is an increase of 185,000 but this could easily be north of 200,000 again, with earnings expected to recover to 0.3%) and then we have the FED move interest rates next Wednesday (March 15). Also, yesterday the Atlanta Fed sharply downgraded its Q1 GDP estimate to 1.3% from 1.8%. Lot’s of mixed signals for investors.
On the Daily chart there are signs of at least consolidation in the stock market rally and SHORT positions were trigger in the USA 30 and USA500 on last nights close with entry this morning at 20890 and 2365 respectively. These positions are against the longer term monthly and weekly trends. The parabolic SAR turned negative on Monday, the MACD and RSI are both sloping down. Additionally the USA 500 has broken the 10 day EMA and closed below it for the first time in 23 trading sessions.
Target 1 for the USA30 is 20745 and target 2 the 23.6 Fibonacci level and 50 period moving average at 20320. Target 1 for the USA500 is 2351.00 and target 2 the similar level to the USA30 where the 23.6 Fibonacci level and 50 day moving average coincide at 2315.00. A break to new all-time highs on either index is possible and would reconfirm and establish the longer term uptrend.
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