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Markets Bouncing, But Recovery Shallow

  • Stock markets are bouncing ahead of the Wednesday NY open, with mainland European markets higher by 1% or so, although the bounce is still comfortably shy of the Tuesday high. The recovery is led by the hardest hit sectors from earlier in the week, with consumer discretionary and tech names leading the nascent recovery.
  • The same pattern is repeated across US futures, with the NASDAQ future higher by 1% or so, while the e-mini S&P and Dow Jones follow suit with more mild gains.
  • Despite the recovery across Asia-Pacific and European trading hours, S&P E-minis are back below the 50-day EMA - the average intersects at 4407.78. A deeper sell-off would highlight a bearish threat and the risk of a pullback towards the key support at 4293.75, Sep 20 low. Price needs to break above 4472.00, Sep 27 high to reinstate the recent bullish theme. This would expose the bull trigger at 4359.50, the Sep 3 high.

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