Originally published by AxiTrader
US stock markets came in for heavy selling last night with the safe haven utility sector the only part of the market to register a gain as markets fret that president Trump's presidency and agenda are under threat.
Of particular interest in what looks like the start of a potential unwind of the trump trade which has driven the S&P 500, Dow Jones Industrial Average, and Nasdaq 100 to record highs the reversal of fortune was most acutely felt in those sectors that lead the stock market higher with tech stocks down 2.75% and finanicals down 2.35%.
That's a clear sign that traders and investors are questioning their previously rusted on belief that whatever the difficulties of this young Trump administration that tax and infrastructure plans and policies would eventually be delivered.
That change of tone saw the physical S&P 500 fall 1.82%, 43.64 points, to 2,357 which is just below the bottom of the wedge stocks have been in since their January low at 2,233.
Naturally, it's not quite the same for the AxiTrader CFD where support comes in around the 2349/50 region from January's low. But in other ways it's just as telling a break because last night's move has taken out the trendline from the Trump election low.
My system is short and my target once 2349 gives way will my long-held target to the 38.2% retracement level of this Trumponomics of 2,258.
And of course one of the key reason I'm bearish is because US data has been so awful lately. The Citibank US economic surprise index is currently sitting at -37.5 where just a month ago it was sitting at 38.2.
My hypothesis on the way up was that president Trump's election gave traders space and confidence to trust the improved data. Now that this very presidency is being questioned - at least the implementation timeline of its tax and infrastructure plans - traders surely must look at the data and take some risk off the table.
The CBOE Volatility Index spike last night suggests that this is already happening. And that means US stocks, and the S&P, could be in for further - deep - falls.
Have a great day's trading.