With the potential second virus wave and a lockdown, US stock futures could slide lower. Short SPX/USD?
Dow fell 6.9%, or 1861 points last night – its worst day since 16 March.
On the other hand, the S&P 500 fell 5.59% or 188 points. It is currently at the 3050-price level.
In addition, the CBOE Volatility Index VIX rose jumped by almost 50%, its highest level since 21st April. VIX is well known as Wall Street’s fear gauge.
The sudden and drastic fall in the US stock futures was due to mainly two reasons:
1) Fed’s grim economic outlook from its meeting on Wednesday.
2) Resurgence in coronavirus infections in half a dozen states in the US.
However, Trump administration pushed back the idea that it would allow the economy to shut down again even if coronavirus cases continue to rise.
This would dampen the economy recovery in the longer term.
We believe that the S&P 500 still have further room to fall compared to the other 2 US stock futures. SPX/USD could slide lower towards 2930 to test the 61.8 Fibonacci retracement level.
(Click on image to enlarge)
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