Global equities plunge again, for intermediate-term tops

Intermediate
  • In a report on Monday we highlighted a more negative tone and threat for the US yardstick index, the S&P 500, but also for global equity markets and averages.
  • This was in the wake of President Trump’s comments on Sunday 5th May, concerning further tariffs on Chinese goods, but also negative moves after the Wednesday 1st May FOMC statement, being less dovish than markets had anticipated.
  • The further plunge lower into midweek from ongoing fears that the US-Sino trade talks are unravelling has caused some of the major averages to signal intermediate-term topping patterns, possibly leaving markets capped for May (and maybe beyond).
  • Here we spotlight the European benchmark index, the EURO STOXX 50 and the broad, US flagship average, the S&P 500.

EURO STOXX 50 intermediate-term shift to neutral below key 3337

We have stressed in recent reports to our clients that “we see an intermediate-term bull theme, BUT with risk growing for a push below 3337 for an intermediate-term shift to neutral” and the break below here on Tuesday sets an intermediate-term range, we see as between the bull gap at 3288-83 and 3433.

Furthermore, the plunge lower Tuesday through key 3339/37 supports rejected Monday’s intraday rebound after an aggressive plunge, to reinforce the topping theme into mid-May, setting risks lower for Wednesday.

For Today:

  • We see a downside bias for 3335; break here aims for 3326, maybe 3305.
  • But above 3383 opens risk up to 3403, maybe 3421.

Intermediate-term Range Breakout Parameters: Range seen between the bull gap at 3288-83 and 3433.

  • Upside Risks: Above 3433sets a bull trend to aim for 3468 and 3500.
  • Downside Risks: Below the bull gap at 3288-83 sees a bear trend to target 3201, 3136 and 3039.

4 Hour Chart

Euro stoxx 50

S&P 500 E-Mini intermediate-term top through key 2877.25

We stated in our Monday report here that “the late January push above 2690.5 shifted the intermediate-term outlook to bullish, BUT risk is growing for an intermediate-term shift to neutral below 2877.25” and the push below here on Tuesday sets an intermediate-term range we see as 2789.5 to 2961.25.

Also, the significant selloff Tuesday reinforced Monday’s very aggressive plunge lower through 2901/00 and 2889.5/85.25 supports to set the bias lower for Wednesday.

For Today:

  • We see a downside bias for 2877/76; break here aims for the 2862.5/61.5 area, then 2850.0 and maybe the support gap at 2844.5-40.75.
  • But above 2908/09 opens risk up to 2916/17, then 2926/27.

Intermediate-term Range Breakout Parameters: Range seen as 2789.5 to 2961.25.

Upside Risks: Above 2961.25 sets a bull trend to aim for 3000.0.

  • Downside Risks: Below 2789.5 sees a bear trend to target 2726.5, 2686.0 and 2627.75.

4 Hour S&P 500 Chart

S&P 500

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