The major US indices are moving lower. The Fitch downgrade is an excuse to push lower from elevated levels. The NASDAQ is leading the way with a decline of close to -1.4%.
Looking at the hourly chart, the NASDAQ index has gapped below its 100-hour moving average currently at 14191.70. Staying below that level and the sellers remain in control in the short term. The 200-hour moving average comes in at 13918.98.. The 61.8% retracement of the move down from the all-time high (not shown) is below that level at 13873.09. Both of those levels will be key barometers for the market going forward if tested. If broken, more selling. If it holds, buyers still hold the stronger hand. For now, sellers are making a short term play below the 100 hour MA.
A snapshot of the markets 11 minutes into the open is showing:
- Dow Industrial Average -118.57 points or -0.33% at 35512.12
- S&P index -35.87 points or -0.78% at 4540.85
- S&P index is down -191 points or -1.34% at 14093.27
looking at the US debt market, yields are mixed with the shorter and lower and the longer and higher:
- 2 year yield 4.897%, -1.2 basis points
- 5 year yield 4.244%, -0.2 basis points
- 10 year yield 4.083%, +3.7 basis points
- 30 year yield 4.174% +7.3 basis points
The spread between the 2 and 30 year is now at -72 basis points. It's still well negative but the spread was as wide as -113 basis points back on July 6.
The 2 – 10 year spread is -81 basis points. That is testing resistance near the July 13 high at -80.6 basis points.
The Fitch downgrade is likely to influence the longer and more than the shorter end. The shorter and is more focused on the Fed. The longer end is focused on the demand for US debt from global investors.
