Saudies went to war!
Yesterday Saudi Arabia went all in into war agains Yemen rebels, 150,000 soldies and 100 war planes. This had a very strong impact on Oil prices that have been rallying upwards since then.
This also produced a ver strong effect on US stock market that went down very fast until 2060. In addition we are seeing the same kind of impact on European stock markets this morning.
European stocks where extremely overbought after the rallying for many weeks, so we can agree that they where just looking for an excuse to initiate a correction and this was it. In this case its a normal correction that makes total sense as long as this indexes don’t loose their main supports but they are still far away from that. However, this could still create extra fear and insecurity on the market. For this reason i think we should be extremely cautious and keep an eye on both Oil and Saudi Arabia.
On my last post about S&P500 at the begining of the week I was suggesting that we where going to go up until the target zone around 2140 but after this situation appeared the market went down and now we have a different technical scenario.
Eventhough the slower oscillators like TRIX are still positive its important to notice that yesterday candle turned around the medium and fast like stochastic and RSI. Still soon to talk about sell signals but its important to keep it in mind.
More important its going to be the trend line that we can see in the graph. This new trend line its going to have to take a very hard test today. In the one hand we can have a market that is still fearful and therefore the resistance doesnt manage to hold and then we should look down to 2000’s again. But on the other hand we might have a market thinking that it has over-reacted the move and realizing that this is not THAT important after all. Which would then put us in the situation of looking again up to 2140’s. Its also important to remember that the current 2060-2065 should be considered as a support zone.
What’s going to happen in a situation like this we cannot know, so we should wait and react to whatever the market decides to do next.