By Chris Becker
Now we have a bath of blood! US stocks sold off very sharply last night in one of the most volatile sessions in years, falling 4% on average across the three major bourses. Is it all because of a new Fed Chair (Jay Powell) or the Nunes memo or Superbowl hangover? No, its because stocks were way overstretched and needed to pullback, which intersected with the reality that the punch bowl is going to be taken away this year, signalled by rising bond yields. Hang on, we could be in for more falls!
Recapping action in Asia yesterday where in mainland China the Shanghai Composite has finally bounced off terminal support at 3400, closing up 0.7% at 3487 points. The daily chart below shows how strong support at 3400 is for anchoring expectations, so should continue to be used as an uncle point here:
