The Scene Is Likely To Get Uglier For Global Equity Markets

Talking Points:

Check out our call for elevated volatility this year and what it could mean for the broader outlook of the S&P 500 in the DailyFX Top Trading Opportunities for 2018 guide.

S&P 500

The Fed raised rates by 25-bps on Wednesday, in-line with expectations. This didn’t mean there weren’t any fireworks for the market, though. The S&P 500 initially shot higher, but then sold off aggressively following. Looking ahead to next week, we have Consumer Confidence on Tuesday, Advance Goods and GDP on Wednesday, finished off by Core PCE on Thursday. The market will be closed to end the week in observance of Good Friday. For details of all over scheduled releases, check out the economic calendar.

The S&P started off the week on a sour note and tried to bounce on Wednesday, but that failure led to a big sell-off on Thursday and Friday. The market closed the week right at major confluence of support by way of the Feb 2016 trend-line and 200-day MA. A bounce may develop from this area of support, but don’t look for it to last long. On a break of support the Feb spike-low is likely to offer limited sponsorship. Overall, should support at hand fail, looking for a move to the lower parallel to develop before seeing a sharp bounce.

S&P 500: Daily

DAX

Looking ahead to next week, the economic calendar holds one ‘high’ impact data event by way of German employment figures to be released on Thursday. Risk trends continue to be a dominant theme here for the benchmark, as Europe in general is quite weak relative to the U.S., which are now weakening as well.

The DAX finally made good on the lower-high it formed earlier in the month, selling off aggressively towards the monthly low. The bearish channel is well intact and suggests we should expect rallies to fail from here. Keep an eye on the U.S. markets as risk trends become increasingly more important to the direction of global stock markets. If risk unravels the lower-side of the channel around 11650 is likely to offer little in the way of support.