The S&P 500 fell to test its 100-day moving average for the first time since October last year
It was one of the worst fall in months for US equities but at the end of the day, the S&P 500 managed to cling on and hold off a break below its 100-day moving average (red line).
The drop back in October was a brief one, brought about by renewed lockdown fears and US election risks (yes, remember when Trump was president?).
As much as the near 2% drop and test of the key technical above yesterday may seem significant, I would argue we're not even close to pricing in any major repercussions or fallouts that could emanate from the risks surrounding China at the moment.
For now, dip buyers are showing some appetite with US futures reflecting a modest bounce going into European trading. But I reckon there are certain quarters in the market who are definitely less confident of a straightforward rebound from hereon.
A lot still depends on China's response in the next day and when domestic markets reopen again tomorrow after the extended weekend.
Risk sentiment is arguably still extremely fragile and it won't take much to turn green to red and for the bleeding yesterday to start running again. The wounds are still fresh.
In any case, an interesting thing to note is that the overall drop seen in September trading so far will only mark the second monthly drop in the S&P 500 this year. The only other time the index fell during the month in 2021 was all the way back in January:
It certainly feels like a sharp correction is overdue, no?