Search ForexCrunch
  • Wall Street hit the skids lunchtime on Monday with a sharp sell-off, likely putting the continued optimism around the US economy and global trade into question.  
  • The DJIA is now down 1.34%, S&P -0.98% and the NASDAQ -1.20%.  
  • As far as timing, a Reuters article reports that the U.S. House Judiciary Committee issued document requests to 81 agencies, entities and individuals in a probe of Trump – the House Judiciary Chairman says the probe is focused on alleged obstruction, corruption and other abuses of power.  

Wall Street has been riding the optimism over trade talk progress between the US and China, with reports from over the weekend, in the WSJ, pointing towards an imminent deal and rade war truce.  The article suggested that “the US President Donald Trump and Chinese President Xi Jinping could reach a formal trade deal at a summit around March 27 given progress in talks between the two countries,” the Wall Street Journal reported on Sunday.  

However, we are all too aware by now that there are going to be obstacles and a high bar with respect to some of the requirements the US wishes to proposes with respect to reforms over regulations and the Chinese do not exactly have a clean bill of health when it comes to such cooperation the international stage. Last Thursday, US Treasury Secretary Steven Mnuchin told CNBC that the United States is putting together a detailed trade agreement with China that will include specific structural commitments, and it is apparent that Trump will walk away from a trade deal with China if it were not good enough.  

Markets are perhaps somewhat nervous as we move into the eleventh hour on such matters, and not disregarding the Brexit time-line either. There are also considerations being put forward between the E.U. and U.S trade officials that are set to create further angst in markets and it would appear the less committed bulls are looking to take profits.  

Investigation into allegations surrounding Trump obstruction of justice

Meanwhile, the investigation into allegations surrounding Trump obstruction of justice have resurfaced in recent sessions and the impeachment of President Donald Trump could be back on the cards. Democrats have launched an “abuse of power” investigation demanding documents from Trump’s government, his family and even his real estate empire. Requests for documents have been sent to 81 individuals and entities, including the president’s family, businesses and administration.  

The White House has confirmed the receipt of one of the requests – “The Counsel’s Office and relevant White House officials will review it and respond at the appropriate time,” press secretary Sarah Sanders said.

Techncial Analysis  

The daily outlook on the DJIA and S&P 500 remains positive with the Ichimoku cloud’s conditions aligned bullishly. However, the DJIA is now testing below the 78.6% Fibo of the Oct swing highs to Dec rout lows with the confluence of the rising trend line support. Both indexes are leaning on the 21-D SMA as well. For the DJIA, the key downside target is the 61,8% level tucked in below the 25000 psychological level at 24847: A level, if triggered, that could spark off a bout of major profit-taking, exposing the 23.6% retracement of the Dec rally to recent swing highs located around 25170 ahead of the 38.2% Fibo at 24500 and 50% Fibo just below the psychological 24000 level.

  • S&P500 Technical Analysis: Biggest drop in 5 weeks put a halt to the recovery rally