7 March 2018 (7:23 AM EST)
Don’t get fooled by stupid, knee -jerk reaction of U.S. stock futures by crashing down just because Wall Street veteran Gary Cohn has resigned from the Trump White House as its chief economic adviser.
U.S. stock markets are trading in a range and have important support levels ahead. So, either stock future will recover before the opening bell or stock markets will recover after a lower opening, just as European stock markets have done.
Global stock markets had a muted, somewhat pissed reaction to a crash in U.S. stock futures earlier during Asia session. Asian stock markets continued to trade positive in early session and finally closed in the red, but reluctantly.
European stock markets are also trading mixed and some of these markets have turned positive after a negative opening.
It is as if global stock markets are now getting irritated by U.S. stock markets’ nervous and knee-jerk negative reactions to every news about Trump White House. If it is not about the economy, then global stock markets will soon start ignoring these every-other-day fall on whimsical happenings in U.S. politics.
Technically, U.S. stock markets are trading in a broad range. Yesterday, Dow Jones had turned down from its resistance levels but recovered quite a bit before the closing bell as the index found support near day’s lower levels. Dow Jones has major technical support near its 100-Day Moving Average, near 24, 500 mark. If the index opens with deep cuts, then it will open near that level and can bounce back from there.
Or, it is possible that lower futures recover by the time opening bell rings in U.S. stock markets and major indexes trade within their intraday support and resistance levels.
You can find those levels on our pivot trading page.
In any case, U.S. stock markets will trade within their previous high and low marks in the early trade. If major indexes find support near their low levels, then we could see a “lower opening, higher closing” type of trade, as European stock markets are doing. And that trading pattern will also support global stock markets in their next session.
If, U.S. stock futures do not recover and U.S. markets also do not find much support after the opening bell, then we may see a narrowly range bound trend in these markets, where major indexes will trade slow paced near their lower support levels.
Watch those levels and trade with the short term trend, which can be highly volatile and range bound today in U.S. stock markets.