Equities Retrace, the Dollar Jumps Higher

After two consecutive weeks of gains, the S&P 500 index retraced last week, closing down by 2.25%. Most of last week’s trading sessions were characterized by uncertainty as neither bulls nor bears were sure of the upcoming direction. The first few days of trading were characterized by consolidation, which then led to a minor drop. The major event of the week was the US Federal reserve’s interest rate decision, as market participants waited for the announcement, as well as the Fed’s statement mentioning how they would deal with current security purchasing programs. Market participants used Wednesday’s session as a pivot day, pushing the indices higher during morning hours, only to slam them down in the afternoon. Although the news was neither bullish nor bearish, profit taking seized the day. By taking a glance at the chart below one can see that despite the mixed signals going forward, most of last week’s selling pressure was due to profit taking. The bullish engulfing candle started the selling pressure which led the S&P500 back down to close just above support.


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