Summary:
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US500 breaks down below October lows
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Market had looked to rise earlier but sellers remain in control
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YTD low of 2530 now possibly set for a retest
Stock markets have endured a tough time of late and there seems to be little let up in the negative outlook with markets in both the US and Europe seeing more selling today. There were gaps lower over the weekend as US trade representative Lighthizer reaffirmed that the 90 day pause in the US-China trade war was a “hard deadline” and even though there was an attempted recovery throughout the morning session sellers have stepped back in towards the European cash close.
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All the American indices barring the volatility index (VOLX) are trading in the red with the US30 the worst hit of the major US benchmarks. Source: xStation
Perhaps most worryingly for stock market bulls there’s not really been any further negative developments that can be attributed as the catalyst for this latest round of selling with it appearing to be more a case of a continuation of the downtrend that is now clearly in place. Legendary hedge fund manager Paul Tudor Jones has been speaking on CNBC today and he has warned of the possibility of further declines ahead.
In the interview, Tudor said that while it was “easy to say, ‘I’m really bullish’ or ‘I’m really bearish,’ I kind of see a two-sided market.” He reiterated previously expressed fears of a global credit bubble.
Downside for stocks is down to increasing global credit risks and falling commodity prices, Jones said, adding that he hoped he wasn’t underestimating the potential negative impact of popping the credit bubble.
That decline, however, could prompt the Federal Reserve to back off on further rate increases in 2019, Jones said, which, along with corporate stock-buyback plans, could clear the way for a rebound. The Fed is widely expected to deliver a rate increase next week, but there is a “high probability that this hike, assuming they hike, will the be the last one for a long time,” he said, in the interview.
The US500 has broken below the low of 2603 seen in October and the market has now opened up the chance of a retest of the 2530 low from the start of the year. Source: xStation
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