Have stock markets found temporary lows? Technically it appears yes.
The moment President Trump announced a brief delay to the latest Chinese tariffs yesterday, equity bulls piled in. Many stocks surged and closed at their near-term highs. Yesterday’s move could be the catalyst that marked a short-term trough.
In Europe, for example, the Italian FTSE MIB Index slumped to near 20,000 intraday before surging to close strongly (see below). The German Dax Index too generated a bullish engulfing candle that signals some short-covering.
The same technical picture is noted for the French CAC Index. A bullish engulfing candle is produced near the support level at 5,200. The FTSE 100 Index has already rebounded from its near-term lows; I anticipate an upside breakout at 7,300.
In the US, key equity indices have rallied to their upper sides, suggesting growing upward pressure. Some stocks may even establish new long-term highs this week as fear subsides, such as Microsoft (MSFT).
What is interesting that Gold have displayed a completely opposite pattern. The metal rose to intraday – and multi-year -highs of $1,535 before closing low. Its trading range was large; prices volatile. At the time of writing, prices are slipping below the key psychological level at $1,500. Displaying a huge negative candle after a strong rally may lead more profit taking orders. A further correction is expected.
Overall, the bearish atmosphere sparked by Trump’s tariffs is now being rolled back partially. I assume that stock markets are establishing short-term lows with the potential of a further bounce as investors assume the correction is done for now.
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Jackson has over 10 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 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.