S&P 500 – To keep an eye on!

Lots of news around the world. China’s Evergrande debt crisis and the Fed’s hinting at tapering on the horizon fueled market volatility last week, but the major indexes were able to wipe out early-week losses.What moved the markets?

Gold prices took a hit, reaching below $1745 amid a stronger US dollar after the Federal Reserve indicated rate hikes could be coming a bit sooner than expected.

The Bank of England (BoE) left its policies unchanged on Thursday but provided some hawkish comments. The bank stated that a rate hike would be implemented if needed before the end of the existing asset purchase program.

The stocks market bounced back higher after two weeks of trading in the red. The stocks market was negatively affected by the Chinese real estate giant Evergrande’s liquidity issue, yet wall street was able to trade higher after Jerome Powell downplayed the risks of the Chinese company on the US economy.

S&P 500 – a pair to watch

We are looking at E-Mini S&P 500 Futures contract for December this week. With quite a trend formed in the last month to the upside and bouncing from 4539.5 level, regular traders would have been looking for a bounce at around 4430.0 level and continuation patterns to appear.

However, with a trend broken, we attacked the month of August lows and successfully bounces away from 4320.0 key level. With DXY getting stronger, foreign currencies going lower as well, we are looking for the downside on S&P 500 as well. Equal highs being attacked early this week could give us a chance to look for short positions in the Index markets with quite some confidence.