It’s been a bloodbath yesterday in the markets following Trump’s reciprocal tariffs announcement as risk-off flows on expected global slowdown dominated the price action.
The stock market is sensitive to future growth expectations and yesterday’s news didn’t help at all. On the contrary, it increased the probabilities of a recession.
Now traders will be on the lookout for negotiations and so on, and especially on the Federal Reserve response (Friday we have Fed Chair Powell speaking). If things continue to deteriorate and the Fed remains on the sidelines because of the inflation constraint, then we could be up for ugly days ahead.
S&P 500 daily
On the daily chart, we can see that the price probed below the March low but eventually bounced back. Dip-buyers are likely stepping in here to position for a rally back into the 5855 level. The sellers, on the other hand, will want to see the price continuing lower to increase the bearish bets into the next support at 5395.
S&P 500 4 hour
On the 4 hour chart, we can see more clearly the reaction to yesterday’s news. The buyers will need to hold the line here or things are going to fall out.
