Markets started the week in the red in the wake of Asian indices after the discussions between the U.S. and China hit a brick wall. The trade war will inevitably affect negatively global markets. The majority of Wall Street analysts may see a buying opportunity in the current market sell-off, on the other hand, UBS strategist, Francois Trahan is foreseeing a market heading lower as UBS "expect the S&P 500 to hit 2,550 by the end of 2019".
Looking at the chart, the S&P 500 remains above the highly critical level of $2,800 which is a strong support area. If this level is violated, we might see a continuation of a slide towards $2,780, which is the 200-day moving average. Conversely, a move above the $2,900 resistance would suggest a market returning to a retest of the all-time high. We are maintaining a short position with a target price at $2,750 and stop-loss at $2,900.
Gold was most likely seen as the “go-to” asset during periods of geopolitical uncertainty, however, over the last couple of years, the majority of investors prefer to turn towards more liquid assets to hedge such as treasury bonds, the Japanese yen and the Swiss franc. Since Monday, we have seen a slight recovery of Gold with 1% up after a disappointing last week. As the yellow metal broke above the 50-day moving average, it will face important resistance at the $1,300 level. Gold is reacting positively to news related to escalated US-China trade war. Hence, we are maintaining our buy with a target price above $1,300.
