Has the S&P500 Topped Out? Short Positions Recommended As Support Tested
The S&P 500 index is trading lower on Wednesday, giving up the record-high levels at 2186.95, attained yesterday as investors are taking a cautious attitude towards the equity market’s ability to stay at record highs against the background of global economic uncertainty and comparatively weak corporate earnings.
The Energy sector is suffering the greatest losses as U.S crude skidded to below $42 per barrel. The sector has lost 0.94% after data from the U.S. Energy Information Administration reported that U.S. crude oil inventories unexpectedly rose by 1.055 million barrels last week, following a gain of 1.413 million barrels in the preceding week. Economists had expected crude stocks to fall by 1.025 million barrels.
Banks and health care companies also weighed on the market. Financial and health care sectors are the two runner-up’s in the race to the biggest losses, having dropped by 0.64% and 0.56%, respectively. Other sectors that are falling into the red are Industrials, Information Technology and Utilities.
Meanwhile consumer-focused stocks have led the gainers, with a 0.3% gain, followed by 0.19% advance in Telecommunication Services. Consumer Discretionary and Materials sectors have also survived the downtrend with about 0.1% surge in each.
According to the Labor Department, job openings increased and more people were hired in June. In the Bureau Of Labour Statistics’ JOLTS survey(Job Openings and Labor Turnover Survey) showed there were 5.62 million openings in June, up from 5.51 million in May. There were 5.13 million people hired during the month, up from the 5.05 million in May.
Fig: SP500 H1 technical chart
SP500 has broken out of the price range between 2176.43 and 2186.24 and is trading around 2175.50, testing the lower end of the range. Bulls have jumped in after each sharp loss but have failed to dominate the market. The price fell below both the 50-period and 20-period moving averages at 2181.26 and 2179.19, respectively, and is expected to drop lower to test the support at 2168.89.
Sell Limit at 2176.43, Take profit at 2168.89, Stop loss at 2177.86