The Markets
Stocks traded sharply lower on Wednesday following another weak set of economic data out of China, as well as concerns that North Korea successfully tested a hydrogen bomb. The panic sent shockwaves around the globe, fuelling another selloff in what has been a dismal start to the new year. The S&P 500 broke below the lower limit of the multi-month declining trend channel, as well as horizontal support at 1990, although the benchmark did manage to end at this level of support at the closing bell. This is the first significant crack to emerge in the market since the start of November peak in equity benchmarks, possibly suggesting the conclusion to the two month old period of consolidation. While trying to avoid becoming too anxious to conclude a longer-term topping pattern, shorter term, the market is oversold around present levels. At the lows of the session, buyers did appear, potentially covering short positions given the employment report on Friday and the start of earnings season next week. Investors will be hesitant about holding negative bets into these pivotal events. Short-term resistance on the S&P 500 Index is apparent around 2020 and then around 2040.
