- Is Fed speak weighing on market sentiment?
- Uncertainty could mount if US government shuts down
- US30 breaks below 200-day SMA
Equity markets are pretty flat in the middle of the week, struggling to pick themselves up off the floor as investors worry about higher for longer interest rates and the economy.
Last week was action-packed and it seems investors are still piecing it all together in the absence of much else happening.
While I often refer to them as eternal optimists, when faced with the prospect of recession in Europe, a sluggish recovery in China, and a Fed that’s seemingly determined to push the economy to the edge despite huge progress already without much pain, it would appear investors are struggling to see the upside.
The only thing that can change that is the economic data providing further evidence that significant progress is continuing to be made.
But if the government shuts down, we won’t be getting that any time soon which would make the October Fed meeting interesting, depending on how long it lasts. There are potentially uncertain times ahead and as the old adage goes, markets hate uncertainty.
A key technical breakout
The US30 has been in decline over the last couple of weeks which may point to a broader sentiment shift in the markets.
Source – OANDA on Trading View
What’s more, the index has broken below the 200/233-day simple moving average band which has been a key area of support over most of the past year, barring a brief breakout in March.
The breakout has also been backed by momentum which may suggest there are more downside pressures building even as it hits a three-month low.
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