Is the latest risk-on sentiment sustainable?
This equity rally seems to be dividing opinion between those who consider it a genuine rebound, and those who think it’s nothing more than a bear market rally. Stocks did decline during the latter half of last week, but the shallowness of it might be indicative of the validity and strength of this move higher.
Using $NDX as a gauge for risk sentiment due to its focus on tech, the index found support just above its 200-day EMA last week, and when coupled with yesterday’s strong session to reclaim the key 15,000 level, it looks like the index may have formed a swing low. If it can break above last week’s high over the coming days it would open the door for another leg higher, and help cement the idea of this being a sustainable new uptrend in the broader market.
However, it’s hard to ignore volume on the major indices has been below average during this rally, potentially indicating investor hesitancy amidst the current geopolitical and macroeconomic climate. Both of these narratives could be exacerbated this week with Wednesday’s FOMC Minutes and the West readying additional sanctions on Russia, both of which would likely harm risk-appetite and send stock on another leg lower.
All trading carries risk, but it should be interesting to see if the market can hold this rally into the new quarter, or if we see another deep pullback.
Submitted April 05, 2022 at 12:17PM by FOREXcom
via reddit https://ift.tt/3Sq8JV1