Expect More Of Same For U.S. Equity Markets This Week
Anna Coulling | May 17, 2021 03:41PM ET
Last week, U.S. equities could best be described as having good two-way price action for day traders but fraught and worrying for investors. And when considering the three primary futures of the YM, the NQ, and ES, for once all were in agreement on the daily timeframes, so I have chosen the YM E-mini as a representative example.
It was the start of the week that signalled a change in sentiment, with Monday’s upthrust candle standing tall like a flagpole on the top of a hill and sending a strong signal of potential short-term weakness, which duly arrived on Tuesday with heavy volume confirming the strength. However, note on Wednesday, where we had a wider spread than the previous day, yet lower volume, suggesting selling pressure was easing, which was indeed the case with the recovery on Thursday on good volume.
However, it is Friday which is the concern. Note how the volume has fallen away on the widespread up candle. And while it was not an extreme anomaly, the fall-off is a worrying sign, and one that has been confirmed in early trading with weak Chinese data helping to cap further advances for equity markets. For the YM Emini, it’s now a question of breaking through the volume-based resistance at 34,200 for a return to the longer-term bullish trend. And speaking of the longer-term, the inflation narrative is likely to dominate the coming weeks and months, with markets reacting and overreacting to data, so expect to see more of last week’s price action, which is great for day trading, but not so good for the nerves of longer-term investors.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.