Loaded down
Is the US stock market starting to crack? A grinding war, triple-digit oil, stubborn inflation. After swallowing it all without flinching in hopes of fresh highs, the market is starting to drag its feet.
To make matters worse, Tuesday’s midterm elections could hand the Democratic donkey a sweeping win over the Republican elephant, with the US Congress, both the Senate and House, potentially flipping entirely.
A broad Democratic victory would chip away even further at the foundations of a Tech sector already weakened by rising interest rates, where the former darlings are starting to slip. Alphabet dropped more than 12% last week.
In that scenario, the all-out deregulation that fuels AI rollout could come under fire, and investors might watch the hyperscalers’ profitability promises drift even further out of reach.
My trading plan
The underlying trend on Dow futures stays bearish, and this week could bring another selling push.
In control of the situation, short sellers took their profits at the symbolic 51,000-point level in early October before letting the market bounce back, but the decline could resume toward 50,000 points.
In this context, the market could first go hunting for buyers’ stop-losses below the 50,858-point support over the coming sessions.
Happy trading!
Maxime holds two master’s degrees from the SKEMA Business School and FFBC. As founder and editor-in-chief of NewTrading.fr, he writes daily about financial trading.
Cracks are showing
Critical condition
Come hell or high water