Pre-Market: Bulls Lick Their Wounds After Late-Day Plunge

Only a meager bounce followed the abrupt turnaround in US stocks on Tuesday that took the major indices back near last week’s lows, with only the still strong Nasdaq being well above its yearly minimum. European equities never left the vicinity of the lows, and although there are no new lows in the benchmarks today, bulls don’t have too much to celebrate.

Nasdaq 100 Futures, 4-Hour Chart Analysis

Short-term downtrends still dominate the technical picture across the board, with only a few positive short-term outliers, most notably the Nikkei, which has been helped by the pullback in the Japanese Yen so far this week.

DAX index, 4-Hour Chart Analysis

With the economic calendar being virtually empty today, as only the Final US GDP print is scheduled to come out before the bell, technical levels and sentiment will likely be the decisive factors. As technicals point to further downside in the coming days but sentiment is still extremely bearish, we could be in for volatile trading with wild swings in both directions around the lows, providing difficult conditions for day-traders.

In case of a break-down, a final flush-out decline and a test of the February low by the Nasdaq would be an ideal setup to start a more durable rally that could clear the extreme sentiment readings. Once again, these levels are not favorable for new short positions,

Forex Markets Settle Down amid Yen Weakness, as Treasury Yields Slump

USD/JPY, 4-Hour Chart Analysis

While the Dollar has been in the center of attention in recent days, today the Greenback is less active before the GDP release. The Great British Pound, the Euro and commodity currencies are all trading close to yesterday’s closing levels, with only the Yen registering meaningful losses again erasing yesterday’s late session gains.

Bond markets are much more active after yesterday’s break-down in yields, with long-dated US Treasuries spiking higher again, as the yield curve collapsed to the flattest in more than a decade on Tuesday.

Commodities are broadly lower today, although the losses are not significant with gold’s pullback below $1350 being the most notable move. Crude oil could turn volatile after the US inventory data (10:30 EST), as usual, with the WTI contract hovering around the $65 level currently.

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Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.