US markets are showing signs of resilience. Below are the daily charts of FXCM's CFDs for the Dow Jones Industrial (US30), the S&P 500 (SPX500), and the Nasdaq (NAS100). Before the invasion, the US 10 Yr. Treasury yield was just above 2% (16 Feb). It gapped down on the news of the Russian invasion of Ukraine last week as money flowed to safe havens, with the yield currently at 1.78%. The lower yields seem to be reflected in equity valuations as the discount rate declines. Over the last two trading days, price action has pushed the SPX500 and the NAS100 up into their respective neutral zones, between the blue bands. The US30 is lagging but is trading at the border between the weak and neutral areas. Moreover, their stochastics have popped above 20 and are pointing upwards. The key is to build an underlying bullish momentum from here.
All three hourly indexes have moved from their respective weak areas into their neutral zones. This movement is positive and considered a bullish development. However, for the resilience to persevere, the stochastics need to move into their upper quintiles, with the indexes moving into their respective bullish areas, between the upper blue and red bands (arrows). If market participants can maintain this short-term bullishness, the daily chart's stochastics will help build the underlying bullish momentum mentioned above.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.