Markets on the edge
Stock markets remain on the edge. We heard a few headlines from Putin earlier, with the Russian President saying that risk of a nuclear war is "rising", and that he will defend Russia "by all available means." This led to a drop in index futures, but the markets quickly rebounded off their lows, only for the sellers to step back in again as we neared European close. We also saw US oil prices hit fresh pre-Ukraine-invasion low sub $73. A large build in US oil product stocks has added to worries about weakness in demand.
Investors are starting to re-focus more on recessionary signals than the peak inflation narrative. They worry that weaker demand in 2023 might hurt company earnings, and the current market valuations might be too high. The fact that inflation remains around 10% in Europe and very high in other parts of the world means central banks will tighten their belts and hold their policy tight for a long enough period to hurt demand further. In the US, the stronger wages and employment data we saw last week may yet encourage the Fed to continue tightening interest rates so that it climbs above 5% before the cycle is paused. This is an additional risk facing equity markets, especially those that pay low or no dividends.
At the time of writing, the S&P had bounced off the lows after testing one of the most important short term support levels at 3914ish (grey shading). A bullish trend line also converges here. But it is now below 21-day exponential moving average. A few days earlier, the retest and break above the 200 MA failed. Long term bear trend also held.
So, you get the feeling that if 3914 breaks now, we might get another puke lower. Let’s see what happens here. The bulls need to defend their ground here if they want higher or at least a recovery back to 3984 short-term resistance. If they fail to do so, 3840 – the base of the breakout – could be the next downside target for the bears.
How to trade with FOREX.com
Follow these easy steps to start trading with FOREX.com today:
- Open a Forex.com account, or log-in if you’re already a customer.
- Search for the pair you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
StoneX Financial Ltd (trading as "FOREX.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, FOREX.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date.
This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it. No opinion given in this material constitutes a recommendation by FOREX.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although FOREX.com is not specifically prevented from dealing before providing this material, FOREX.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. For further details see our full non-independent research disclaimer and quarterly summary.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.
FOREX.com is a trading name of StoneX Financial Ltd. StoneX Financial Ltd is a company incorporated in England and Wales with UK Companies House number 05616586 and with its registered office at 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is authorised and regulated by the Financial Conduct Authority in the UK, with FCA Register Number: 446717.
FOREX.com is a trademark of StoneX Financial Ltd. This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy. FOREX.com products and services are not intended for Belgium residents.
© FOREX.COM 2025