Forex Analysis & Reviews: 17.05.2022 - American Premarket on May...

17.05.2022 01:33 PM

American Premarket on May 17: the American stock market comes to life

US stock index futures rose sharply in trading on Tuesday as the market attempted to recover from the severe losses seen in the past few weeks. Futures contracts linked to the Dow Jones Industrial Average jumped 400 points or 1.2%. S&P 500 futures gained 1.6% and Nasdaq 100 futures gained 1.9%.

In general, if you look at it this way, risky assets are gradually beginning to be in demand. Today's growth comes straight from the overnight Asian session, where traders reacted positively to the news about COVID from China. For the third day in a row, no cases of infection with the virus have been reported in Shanghai, the key economic center of the country, where strict quarantine was imposed due to COVID. The stabilization of the US market in the last two sessions also returns investors' appetite for risks, as much cheaper stocks - especially technology companies - are already haunting many. It is noteworthy that since the beginning of the year, the S&P 500 and the Dow have fallen by 15.9% and 11.3%, respectively - which is not a reason for medium and long-term investors to enter the market.

Today, all traders' attention will be on the data on retail sales in the United States, which will be published before the opening of the regular session. These figures will give an idea of how well the consumer is coping with rising inflation in the US, which prompted the Federal Reserve to start a cycle of raising interest rates. It is precisely such actions of the Fed, together with inflation concerns, that have become a deterrent for the stock market. However, some investors still fear that the US economy may eventually plunge into recession. Many indicators now indicate the risk of a contraction or recession of economic growth. Now economists are expected to work out a basic scenario in which a recession will occur at the end of this year and the beginning of next.

Fed Chairman Jerome Powell is also expected to speak today.

Premarket

Home Depot shares rose more than 3% in premarket trading after the home improvement retailer posted better-than-expected quarterly results. The company also raised its annual forecast.

Citigroup securities rose 5% in the premarket after it became known on Monday evening that Warren Buffett's Berkshire Hathaway invested almost $3 billion in the struggling bank in the first quarter of this year. It is worth saying that Citi shares have lagged behind the rest of the financial sector over the past 12 months, falling by almost 40%, while the SPDR ETF for the financial sector has fallen by only 12% over the same period.

As for the technical picture of the S&P 500

The good start to the week continues. Buyers have already taken the $ 4,069 level, and until the moment when trading is conducted above this range, bulls can count on the continuation of the upward correction. The protection of $ 4,069 during a regular session after the release of US data will be an excellent starting point for building up long positions in a trading instrument, which will strengthen the confidence of traders counting on an upward correction. Fixing above $ 4,116 is the nearest resistance level, which will open the possibility of a return to $ 4,157. In case of pessimism and more talk about high inflation and the need to fight it, as well as very weak statistics on the US, we will see a major sell-off below $ 4,069. Reducing the trading instrument under this level will quickly push it to a minimum of $ 4,037. Having missed this range, it is best to postpone the purchase of a trading instrument to a minimum of $ 4,005.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.