Tech shares bore the brunt of the pain in trading yesterday but the losses in Wall Street just ate a little bit into the gains on Monday. That of course followed the technical scare from Friday last week, which set up a rather gloomy mood early this week before US president Trump came to the rescue.
The timing of Trump's message is rather uncanny, as US stocks looked like they were on the verge of a major technical breakdown. And it could have been one that got really ugly, really fast. I don't want to say it is a coincidence but it is a little naive to think Trump isn't watching the stock market. After all, the stock market slumping is arguably the number one thing that he really hates most - among other things with regards to the US-Iran conflict.
So far today, US futures are bouncing back again on hopes that we could see better developments on the Strait of Hormuz. From earlier: Iran allows conditional Hormuz transit as thousands of ships remain stalled
That's keeping markets hopeful and we're seeing S&P 500 futures be up 0.8% with Nasdaq futures up 0.9% currently. There's been some pushing and pulling to start the week but overall, we're not seeing a technical breakdown in Wall Street just yet. The risk is still there after the Friday drop threatened that but dip buyers are keeping the faith amid the mix of headlines in the past few days.
On Friday, both the S&P 500 and Nasdaq fell to fresh lows since September last year. And things were looking dicey early on Monday before Trump talked up hopes for a deal amid "very productive" talks with Iran. That changes the name of the game and puts the technical driver aside in favour of headline-driven risks at the moment.
While the Nasdaq traded back below the low from November last year, the S&P 500 is at least still holding the line from the October and November lows in trading yesterday. And that tees up the mood for today, with investors looking for another bounce to try and invalidate the technical breakdown from Friday.
Headline risks may be the key driver of trading this week, but just be wary that the technicals are also a key factor in consideration for US stocks at this juncture.
