Dow Jones, S&P500 and Nasdaq 100: US Indices Slide Today on Oil Surge Fears

Stock Futures Slide Late Session as Oil and Rate Fears Mount

The fundamentals driving the major U.S. stock index futures lower late in the session on Thursday are the fear of higher oil prices and higher interest rates for longer than previous expected. The negative factors are adding up, casting a bearish pall on the market. They include Iran’s stronghold on the Strait of Hormuz, which is causing a major supply disruption in the area, and the U.S. government’s inability to escort ships through the area. Both factors are signaling a long-term war, which is contrary to what President Trump said earlier in the week.

September Now the Target for First Rate Cut

A prolonged move above $100 a barrel will be inflationary, slow global growth and likely alter central bank policy. Investors are starting to look at September for the first rate cut this year after Goldman Sachs changed their forecast to that month. U.S. stock market investors are liquidating positions because another delay by the Fed will increase risk for holders of higher-yielding assets like stocks.

E-Mini Dow Straddles 200-Day Moving Average

The March E-mini Dow Jones Industrial Average futures contract is in a downtrend. A trade through 48266 will change the minor trend to up and shift momentum to the upside. Taking out 46333 will reaffirm the downtrend. The major support is the November 20 bottom at 46155.

Short-term resistance is the retracement zone at 47857 to 48383. This zone stopped the rally on Tuesday at 48266.

The E-mini Dow is straddling the 200-day moving average at 47000 late in the session on Thursday. Trader reaction to this indicator will set the tone into the close.

E-Mini S&P 500 Testing Key Support Cluster

March E-mini S&P 500 Index futures are also in a downtrend. A trade through 6852.00 will change the minor trend to up and shift momentum to the upside. Resistance is the retracement zone at 6784.25 to 6831.25.

On the downside, support is the retracement zone at 6696.25 to 6644.50. Inside this retracement zone is the 200-day moving average at 6693.88. It actually forms a support cluster with the 50% or upper level of the zone. This makes it key support as well as the trigger point for an acceleration to the downside.

The benchmark index is currently testing the support cluster. Trader reaction to this area will set the tone into the close.

Nasdaq-100 Hinges on 200-Day Moving Average

The March E-mini Nasdaq-100 Index futures contract is also trending lower. Its direction into the close on Thursday hinges upon trader reaction to the 200-day moving average at 24662.58.

A sustained move under the 200-day moving average could trigger an acceleration to the downside with the next major target this week’s low at 24000.00.

On the upside, the key indicator to watch is the trend line at 24915.25. Overtaking this level will shift momentum to the upside with the 50-day moving average at 25333.80 the next major target.

All Three Indexes at a Major Inflection Point

All three major indexes are trading on the bearish side of their respective 50-day moving averages, while testing the long-term 200-day MA. This set up means we’re at a major inflection point in the market. If all three take out their 200-day MA’s with conviction then look out to the downside. The catalyst we’re looking for is a spike above $100 by both the WTI and Brent crude oil.

More Information in our Economic Calendar.