The Worst Day for Bears Ever

Bloomberg says yesterday’s movement was so far the wildest. It was the first time in history for the US500 to crash by 2% and close the day 2.8% above the neutral line. There’re several possible reasons for the move. First is an enormous amount of PUT options (an option that profits when an asset falls). Even a slightly good reading may cause a squeeze when most traders are shorting.

The second possible reason is good expectations for the upcoming earnings season. Today, Citigroup, Wells Fargo, and JP Morgan will release their earnings before the market open. Banks usually benefit from high inflation. However, the housing market is under pressure, raising concerns about banks’ revenue expectations.

Technical analysis

The US500 chart looks great for short-term traders. On the M15 timeframe, we can look for a reaction on the support area and a bounce to the 50-period MA. After that, we expect a decrease because many traders bought the index yesterday and will try to close part of their orders before the weekend.

US500 M15 chart

Resistance: 3680, 3700

Support: 3640

What else to look after?

US will release Retail Sales and Core Retail Sales at 15:30 GMT+3, affecting EURUSD and USDJPY.
FOMC Member Waller will give a speech at 19:15 GMT+3.
GBPUSD is near the resistance trendline (1.1400). The pair may slide lower to the support of 1.1900.
Elon Musk is under investigation by Federal authorities because of his suspicious activity over the Twitter deal.
Risk-off sentiment returned to oil markets, causing a sideways movement in XBRUSD.

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