Markets Suffer Deep Intraday Reversals Across Equities and Crypto
It was a harsh day for risk assets, with markets opening higher only to give back all those gains, finishing sharply lower.
It was a harsh day for risk assets, with markets opening higher only to give back all those gains, finishing sharply lower. The S&P 500 exemplified this. The index was nearly 2% higher at one point, but it suddenly reversed around 10:45 a.m. Eastern Time, with the index dropping more than 3% from its intraday high [chart1]. It was a major intraday reversal and raises serious questions about where this market is headed next.
(Source: Morningstar)
Past performance is not a reliable indicator of future results.
The S&P 500 rose right up to a trendline that was established in mid-June [chart2]. It reached that trendline and then reversed sharply off it, undercutting even the most recent lows and closing at its lowest level since mid-September. For now, the index appears to be trying to hold around 6,550, but with options expiry on Friday, 21 November, that could change quickly. If the region at 6,550 is lost, the index could slip to around 6,400.
(Source: Morningstar)
Past performance is not a reliable indicator of future results.
For the NASDAQ 100, the intraday reversal was even more severe, with the index falling more than 4% from its high around 10:40 a.m. The NASDAQ actually dipped below a significant uptrend that began at the start of May and tried to regain that level today, but it failed. It now rests on a support region at 24,100 [chart3]. However, a break below 24,100 could open the door for the NASDAQ to slip back towards 23,000, or possibly even 22,775.
(Source: Morningstar)
Past performance is not a reliable indicator of future results.
The decline was worse for Bitcoin, even without accounting for the drop from the intraday high. The cryptocurrency fell by nearly 5% during the day and is increasingly approaching the support zone between $83,000 and $85,000 [chart4]. A breach of the $83,000 level could lead to a decline towards approximately $74,000. However, Bitcoin is also entering an oversold zone, testing the lower Bollinger Band, and with the RSI around 24.5, a sharp rebound could therefore happen at any moment. Nonetheless, it seems the markets are simply seeking a stable area for the cryptocurrency where buyers might finally appear in larger numbers.
At this point, Bitcoin is down about 30% from its recent high on 6 October at roughly $126,000.
(Source: Morningstar)
Past performance is not a reliable indicator of future results.
The lower job revisions took some of the steam out of the better-than-expected non-farm payrolls report, but it still supported the dollar's strength against the yen, with the yen rising to around 157.60 and approaching the upper resistance level at 158.50 [chart5]. If the yen weakens through 158.50, the next resistance zone would be approximately 161. However, much like Bitcoin, the yen appears overextended here, with the RSI above 70 and trading above its upper Bollinger Band, so caution is warranted for a potential pullback — or, in this case, a possible strengthening of the yen. Much of this relates to the Japanese government’s plan to increase fiscal stimulus, suggesting headline risk remains in either direction.
(Source: Morningstar)
Past performance is not a reliable indicator of future results.
Oracle appeared to work off its oversold conditions over the past couple of trading sessions, with the shares today rising to their 10-day exponential moving average before reversing sharply, creating a bearish engulfing pattern based on the current setup. The lower Bollinger Band sits around $199, suggesting the shares still have room to fall. That also aligns with a support area that dates to early–mid June.
(Source: Morningstar)
Past performance is not a reliable indicator of future results.
Finally, it became clear that NVIDIA was unable to stabilise global markets, with shares dropping 3% on the day and reversing a nearly 5% gain, resulting in an intraday reversal of about 7.5% [chart7]. More importantly, NVIDIA now sits on a critical support level around $180, and if this level breaks, there is potential for the shares to decline towards $170, which would, of course, have negative implications not just for NVIDIA but for the wider market. The RSI remains firmly trending lower and is currently around 43, suggesting the shares could fall further, as momentum to the downside may only just be gathering.
(Source: Morningstar)
Past performance is not a reliable indicator of future results.
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