[WATCH] Closing bell — S&P 500 U-turn

In today’s Money Weekend, Thursday’s US CPI numbers caused significant volatility in the markets. Watch the “Closing Bell” video to see the levels to watch, which would indicate the start of a bullish turn…

US CPI figures released on Thursday sparked high volatility in equities.

The S&P 500 first sold nearly 100 points, then turned around and rallied nearly 200 points from the low! It is a range of 5% on the day.

Reversals often start this way, so I will be watching the next few trading days carefully to see if there are any follow-on buying that could confirm the start of a bearish rally.

The odd thing about Thursday’s US rally is that their bonds didn’t rally with stocks. The US 10-year bond yield is still knocking on the 4% door.

UK bonds rallied impressively, with the yield on their 30-year bond dropping around 25 basis points. This may have relieved markets as UK bonds have recently come under extreme selling pressure.

But other than that, I couldn’t see any news that would be a valid catalyst for such a sharp reversal in stocks that day.

If there is no follow-on buying and the S&P 500 drops quickly to head below the low created Thursday at 3,491 – watch out. That’s when we could see things unfold quickly.

But until then, I will go back to a neutral bias and potentially buy a few short positions, provided we get further confirmation that the reversal was the start of a bearish rally.

Watch the “Closing Bell” video above, where I show you what we need to see before we turn bullish.

Cheers,

Murray Dawes,
Editor, silver weekend