Stocks Decline to End a Volatile and Bearish Week

US equities closed another hectic session with sizeable losses, despite the relative stability of the weakest European and Asian markets. We saw another intraday rally attempt on Wall Street after a bearish open, but sellers stepped in the last hours of trading and the major indices all finished deep in the red, although above the multi-month lows hit in early trading.

Nasdaq 100 Futures, 4-Hour Chart Analysis

Amazon (AMZN) and Google parent Alphabet (GOOG) weighed on the market after post publishing negative outlooks, as more and more analysts are talking about an impending earnings recession amid the global slowdown. On a positive note, Intel (INTC) managed to hold on to its initial gains, but the stocks is still down by 20% from its all-time high, and technicals are not pretty in the tech segment.

Amazon (AMZN), 4-Hour Chart Analysis

Although Amazon (AMZN) declined by almost 10% yesterday, we are talking about a company with a market value of $800 billion, mind you; the move is consistent with the recent market conditions, well describing the spike in volatility this month.  While the retail giant “only” missed in its top-line, beating earnings estimates, the plunge was fueled by the firm’s disappointing guidance for the holiday season.

Russell 2000 Index CFD, 4-Hour Chart Analysis

Small-caps managed to show some strength after an outright collapse that led the broader market’s decline as well. This stability could be a sign of an impending oversold bounce, which could be also fueled by a possible rally in Europe and China.

That said, the damage to the US market now has been done, and it will be a steep mountain to climb for bulls, even as seasonality favors a year-end rally. The majority of stocks rolled over or rolling over on Wall Street, and although large-cap issues are still holding up the market, the most reliable breadth-indicators are clearly bearish.

Dollar Pulls Back but Risk-Off Flows Still Strong

Dollar Index, 4-Hour Chart Analysis

The US Dollar got very close to its August highs, as measured by the Dollar index, while the EUR/USD pair briefly fell below 1.1350 after the ECB meeting, but now the Greenback is facing stiff resistance, and given Trump’s attack on the Fed, a more durable pullback could be ahead.

The long-term trend in Dollar remains clearly positive, and odds favor new highs in the coming months, especially if the global risk-off shift proves persistent.

Gold Futures, 4-Hour Chart Analysis

The main safe-haven assets, the Japanese Yen, Treasuries, and gold all experienced inflows this week, with especially Treasuries being very volatile. Given the strength in the Dollar, before Friday, gold’s gains were muted, but the precious metal still scored a marginal 4-month high just below the $1250 level.

Gold this hasn’t established a new uptrend with a clear breakout to a higher high, but should the Dollar enter a pullback, the recovery could continue in earnest after the grueling downtrend in the metal.

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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.