On analysis of the movements of the S&P 500 Futures, I find that the final count-down had already started in the first week of 2022. I explained the downward movement of the S&P 500 Futures while writing my last analysis of the index.
Undoubtedly, the S&P 500 Futures had already given an advance signal in January 2020 with a sudden jolting breakdown from 3392 to 2192, within a short span of the subsequent 24 trading sessions in March 2020; as the confirmation of the first case of Covide-19 was the only reason behind this knee jerk downward move. Since then, the S&P 500 Futures have been feeling the pain of denting the impact of the pandemic over the global economic slowdown.
Chinese slowdown could be the first to dethrone global equity bulls from the heights they attained due to the resurgence of Omicron almost at peak level during the last week of December 2021. Undoubtedly, Omicron has already pushed the reverse gear of the global economic growth with a sudden surge in COVID cases in most parts of the world.
Now, Russian President Putin has played a new trump card on Mar. 11 by announcing a ban on the export of fertilizer to the west to counter the ban, imposed on Russian export by the United States and some western countries to isolate Russia from the rest of the world for its invasion in Ukraine.
This step by Russia looks evident enough to create food crises in the rest of the world as Russia holds 13% of the total fertilizer production of the world. This might be a more lethal instrument than a chemical weapon. The United States and some western nations are busy supplying the latest weapons to Ukraine to counter Russian forces who are still creating terror in most Ukrainian cities.
The scarcity of food production will hit the global economy more severely. Global equity markets are at a decisive point from where a final meltdown could start at any time amid growing uncertainty. Undoubtedly, the S&P 500 Futures, passing through a bearish phase, could see a jolting downward move during the upcoming week.
In a monthly chart, three consecutive red candles look evident enough for a steep fall if the S&P 500 Futures find a breakdown below the immediate support at 4108.
In a weekly chart, entry of the S&P 500 Futures inside the ‘Ichimoku clouds’ along with the formation of a bearish crossover could continue the current fall during the upcoming week. Undoubtedly, there was a pullback from the week’s low at 4142.8, but the bears look aggressive enough to hit the lower end of the ‘Ichimoku clouds’ at 3883 if the S&P 500 Futures find a breakdown below the immediate support at 4057.
In a daily chart, the S&P 500 Futures continued to struggle below 9 Days Moving Average, which is currently at 4282 but could not sustain above this and finally closed the week at 4206.9. Secondly, the formation of a bearish crossover with a downward move by 9 DMA and 26 DMA below 200 DMA confirms a steep fall ahead.
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