Wall St futures flat amid US-China trade jitters; bank earnings in focus
It has been a while since we have seen the kind of one-day selling markets experienced on Friday, again driven by Trump’s idiosyncrasies. Where he might gain a win in Gaza, he undos with rumors of tariffs, with a government shutdown running in the background that offers little in the way of an exit given his penchant for layoffs of Federal workers. One day of selling doesn’t kill a rally, but it has put a big dent in the confidence of the rally.
The Russell 2000 (IWM) sliced through its 20-day MA and is on course to test its 50-day MA and rising trendline support. A break of this line would be more terminal for the current bullish run, and open up for a test of the 200-day MA. I would expect some form of bounce on this test; the question will be, how much? Technically, we have a ’sell’ in the ADX, along with the earlier MACD ’sell’.
The S&P 500 has already cut through its 20-day MA and trendline support, with a test of the 50-day MA coming soon. There is a fresh MACD trigger ’sell’ to go with the earlier MACD trigger ’sell’.
The largest loss was experienced by the Nasdaq as it gave up 3.5%, but it also had the most to give up and still retained its bullish momentum. The ADX and MACD are on ’sell’ triggers to go with confirmed distribution.
Bitcoin($BTCUSD) nearly covered the breadth of its trading range in one day, but the significance of its loss is reduced by virtue of that trading range. Technicals are net negative, but unless there is an undercut of $107.5 - that will likely coincide with a run on the 200-day MA - there is no bearish reversal.
Semiconductors experienced its biggest hit on Friday, giving up over 6% on a move back to its 20-day MA.
The one chart I want to keep track of is the Investor Sentiment Index. It has been in a period of whipsaw since coming out of Trump’s Tariff Tantrum and hasn’t yet established if it’s entering a new period of bullishness or bearishness. If this had been in more of a base as it had been in 2023, I would be much more optimistic for a longer bull market, but this is a rally that has been running for years.
However, the April 2025 swing low is unlikely to see a revisit, so even if there is a sell-off, getting down to 5,500 might be the extent of such a move. In the meantime, taking profits to build a war chest for the next oversold market state is the best course of action here.
