S&P 500 update after the Evergrande crisisHello everyone, as we all know the market action discounts everything :)
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China Evergrande Group has missed a second bond coupon payment in as many weeks, renewing concerns over its ability to repay over $300 billion in liabilities.
This Showed an instant effect on the market, the S&P 500 by dropping almost 2% today it went from 4377.41 to 4301.01 and because Evergrand seems to be heading into default and the grace period of 30 days has started, This could be the start of a big market crash that is similar to the Lehman brothers crises that caused the 2008 crash.
Possible Scenarios for the market :
Scenario 1 :
The markets seem to be heading in a Bearish way that will cause a further drop in the market and the first stop will be the support level located at 4248.77 and from there the market will have a chance to stabilize but for that to happen the Bulls need to step in and gain control over the market in hope to prevent a further drop.
If the Bulls were able to gain control then we will see a bounce of that support level that will lead the price back near the 4347.83 level.
Scenario 2 :
After the market reaches the first support at 4248.77, The bears most likely will not allow the Bulls to gain any control which will lead to a breakout of that level that will lead into a further drop possible leading into the 4191.93 levels which could be an early warning signs for a crash in the Economic world.
Technical indicators show :
1) the market is below the 5 10 20 50 100 MA and EMA indicating a Bearish short/mid trend, and still above the 200 MA and EMA that indicates a Bullish Long-trend.
2) The RSI is at 34.17 showing weakness in the market with a strong chance that the indicator will go into the overbought zone.
3) The ADX is at 30.35 showing that the market is trending, with a negative crossover between DI+ (12.33) and DI- (36.94).
Weekly Support & Resistance points :
support Resistance
1) 4352.12 1) 4512.31
2) 4248.77 2) 4569.15
3) 4191.93 3) 4672.50
Fundamental point of view :
Asian equities followed Wall Street sharply lower and bonds rallied on Friday, as risk sentiment soured amid growing worries that inflation may persist even after global growth has peaked.
U.S. stock futures pointed to a 0.60% decline for the S&P 500, following a 1.19% drop in the index overnight that punctuated its worst month since March of last year.
Federal Reserve Chair Jerome Powell said on Wednesday that resolving "tension" between high inflation and high unemployment is the Fed's most urgent issue, acknowledging a potential conflict between the U.S. central bank's two goals of stable prices and full employment.
China has proved another particular worry for investors: the economy took a hit from regulatory curbs in the tech and property sectors and is now grappling with a power shortage that threatens to push up energy prices globally. According to reuters
Concerns over China Evergrande Group have put investors on edge and added to recent worries over economic growth from the Delta variant.
This is my personal opinion done with technical analysis of the market price and research online from Fundamental Analysts and News for The Fundamental point of view, not financial advice.
If you have any questions please ask and have a great day !!
Thank you for reading.
