In recent commentaries, I have warned about equity markets’ short-term overbought technicals. This is unsurprising given their large advances over the past three weeks.
Indeed. Tuesday saw key US indices consolidate from their near-term highs. Dow Industrials, for example, encountered stiff resistance at the 150-day moving average to pause its rebound (see Featured Chart). Renewed fears about economic growth, tariff war, and the negative impact of the (ever lengthening) gov shutdown are weighing on risk sentiment.
For the S&P 500 Index, it too gave back some of its recent gains. Prices soften from the vicinity of the 150-day moving average trend indicator (see bel0w). Prices are still trading beneath its prior trading range at 2,650.
Overall, it is possible that equity indices may experience a choppier trend going forward, bouncing up and down within their near-term trading ranges. The more suitable tactic now is to buy on weakness and sell on strength.
Jackson has over 15 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world’s largest institutions and hedge funds.
Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University.