GREEN DAY AGAIN

After the brutal last week, US benchmark indices turned into green finally again on Monday. They gained and rallied US stocks after the S&P 500 endured last week its worst weekly percentage drop in two years.

• SP500 +0,7%
• DJIA +0,5% (YTD still in negative with -0,04%)
• Nasdaq +0.7%
• Russell 2000 +0.9%

This week will determine whether the market break up or break down. During this volatile week we are going to have a proper answer for that question. The question is, we are facing to rally or decline. What to do now? Just patience and watching and waiting. We should expect some extreme volatility for this week so you should fasten your seatbelts and reduce your position sizes.

The reason of volatility is the fear. After a great rally, the SPX hasn’t seen a 10% correction in over three years, and hasn’t seen more than a 6% correction in nearly 20 months vast majority of investors are scared enough. The investors remained cautious over the timing of the Federal Reserve’s interest-rate hikes too since last week FOMC meeting.

In terms of technical analysis the Nasdaq should close above the 3,900 key resistance level on the daily chart and if that level is taken that might be a good sign for bulls.

The BFM Assets Team.