Fear takes over WallStreet

October 25, 2018

The main indices, Dow Jones and S&P500 go into annual losses

The North American markets are living their particular “red October”. The S&P500 has perforated, for the moment in the absence of confirmation in monthly closing prices, the support of 2700 points. On this level, its 200-day moving average currently passes, a technical reference that, should it be crossed to the downside, could be anticipating the start of a new corrective stretch on a large scale. As far as the technology sector is concerned, it has not yet lost key support, but it is on the doorstep. Some disappointing results from Apple, Alphabet or Amazon could put the finishing touch to that selective and “shoot the fuse” of new corrections.

It is important to put the current corrective process in context. The recent falls are part of the longest upward process in history (2009-2018), a spectacular recovery that has led the heavyweights, both selective industrial and technological, to accumulate revaluations hardly justifiable. Apple and Amazon have exceeded 1,000,000,000 million in market capitalization and more than 30 companies are in the range of between 550,000 and 800,000 million, “astronomical” figures practically impossible to sustain with current operating forecasts. From all this it could be inferred that the North American market could have initiated a healthy process of regulation-consolidation, favorable scenario to generate good purchase opportunities in the medium term.

Fear in WallStreet

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