- US equities witnessed extensive selling pressure on Thursday.
- The correction in the S&P 500 index seems to be intensifying.
- In parallel, the German DAX is maintaining a sideways trajectory, with a possible imminent shift towards seller dominance.
Thursday proved tumultuous for U.S. stocks as they veered off course, relinquishing early gains to spiral deeper into the jaws of a correction.
Investor nerves are taut, reflective of the CBOE Volatility Index (VIX), dubbed the “fear index,” spiking to its loftiest peak since May.
The recent descent follows an initial hiccup on Tuesday, initially interpreted as a shift towards small-cap stocks. However, Thursday’s downturn painted a broader canvas of stock market distress.
This tempest unfolds amidst the ongoing second-quarter earnings season, with tech giants poised to unveil their financial performance next week.
Amidst this financial turbulence, let us carefully dissect the pivotal levels governing the S&P 500’s movements as the index battles a two-day decline.
In tandem, we shall scrutinize the technical landscape of the German DAX post the European Central Bank’s decision to maintain rate stability in its recent gathering.
S&P 500: Crucial Levels to Monitor Amidst Correction Woes
After a prolonged period of exuberance dominating the markets, the S&P 500 has finally stumbled into the realms of a much-anticipated correction – its most substantial recoil since April. The previous two trading days witnessed the steepest fall since April, hinting at the probable onset of a corrective phase.
An ominous zone looms around 5500, where an ascending trendline intersects with critical support benchmarks. A breach beneath the pivotal juncture at 5400 could spell dire straits for buyers, heralding a probable trend reversal. Should this nightmare materialize, sellers are likely to target the 5000 level next.
DAX Vulnerable to Amplified Selling Pressures
Since early May, the DAX has been ensnared in a consolidation phase, with its upper threshold hovering proximate to historical peaks situated slightly below the 19,000 point mark. Given the recent downturn in U.S. markets, the DAX confronts the specter of a potential downward spiral eyeing the lower boundary lurking near the milestone of 18,000 points. This alignment echoes the pervading pessimism engulfing the wider market.
If the sellers successfully breach this support fortress, their next destination might rest a stark 1,000 points beneath at 17,000. However, a sentiment reversal coupled with a resumption of the upward trajectory could redirect investor focus towards the psychological barricade at 20,000 points.
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Disclaimer: This article serves purely informational purposes; it does not constitute solicitation, advice, guidance, or counsel for investments, thus refraining from any attempt to incite asset acquisition. It is essential to remember that any investment asset demands extensive evaluation from diverse perspectives, accentuating its inherent risk. Therefore, all investment decisions and associated risks solely rest with the investor.
