Owing to the Chinese roller coaster kind of a situation with equities, stock markets around the globe reacted aggressively resulting into heavy losses for investors (in American as well as Asian equities). The ‘big fall’ story begins at the start of current week. An over 8 percent fall in Shanghai Composite Index provoked almost every index in the globe to simply fall in the ‘red’ line as a sheep. This was a crucial reason for European and American market to also witness the same kind of hostility.
This post can probably help people caught in the heavy correction of S&P500.
S&P500 has shown a really weak trend and it seems not to stop in this very bearish mode.
The US index tried taking support from the crucial level of 1830 and moved up to 1940 in almost no time. The move was more of an impulse-momentum rather than a gradual move which could indicate something positive.
Unfortunately, S&P500 fell back to 1870-1865 the following day.
This is probably a dangerous sign and hence investors are advised to skip trading in key stock indices for some time or at least hedge their position with put options.
Note: As far as our analysis is concerned, Fed shouldn’t hike interest rate.
Investors can resume with the long position in S&P500 once it is back to normal action.
The market has been trading in a very impractical kind of range which can prove to be dangerous for highly leveraged futures based trades.
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