The worst is over. For now.
Buyers manage to halt the slide in the S&P 500 at close to the 5200 support level. Expect further tests but support is likely to hold.
The Russell 2000 Small Caps ETF (IWM) similarly encountered strong support at 200. We expect retracement to test resistance at 210 but another test of support is likely.
Ten-year Treasury yields are testing long-term support at 3.8%. The low level should boost demand for stocks (value) and precious metals.
Dollar Index found support at 102.50 on the weekly chart below. Retracement is expected to test resistance at 103 but another test of support is again likely.
Bitcoin broke support at $56K but is now retracing to test the new rtesistance level. Respect would confirm the global liquidity contraction, possibly forcing the Fed to intervene.
Brent crude is testing support between $76 and $77 per barrel despite rising fears of escalation in the Middle East. We expect strong support at this level and retracement to test resistance at $80 is likely.
Conclusion
The worst is over for now but it would be sensible to wait until the dust settles.
Though we couldn’t resist a few cheeky bids on stocks we have been following for a while.
Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.
Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.
Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.