FEAR DRIVES THE MARKETS

The endless scary headlines were driving investors crazy yesterday too. The traders nowadays have many fears like Russia, Gaza, FED interest rate policy, Ebola … etc. They really start to worry about some huge geopolitical turmoil and those freak them out and turn them into risk-off mood. As the old rule says “Fear sells, happiness buys.”

U.S. indices closed sharply lower yesterday following reports that Russia is building up its military presence on the border with Ukraine. Finally, it was only a gossip, but was enough to push US markets in the deep red territory.

The close:

• S&P 500 -1%
• Dow -0.9% 
• Nasdaq -0.7%

The Dow Jones has fallen in 8 out of the past 10 days, so those 10 days passed almost without any rebound. The picture is more complex if we see:

• Dow is -4.1% its July 16 record close
• Dow is -0.9% in the year to date
• Dow is its lowest close since May 20

Will markets rebound after this selloff? For sure that is only question of time. If something goes down needs to come up too. Technically seems still the same key level on the Nasdaq chart. The index should close above the 3,900 level, if it would be taken the rally could start again.

The BFM Assets Team.