Pre Open US - US Indices 14 Aug 2023

The S&P 500 (SPX) concluded its second consecutive week on a downtrend, with analysts continuing to emphasize its lofty valuation and the imminent risk of a market correction. The index experienced a 0.3% decline, testing the initial support level at 4450.

The Nasdaq Composite Index (IXIC), skewed towards technology stocks, witnessed a 1.9% drop, following its previous decline of 2.85% during the first week of August. The index is currently approaching a critical near-term support threshold of approximately 13000.

Traders at JPMorgan have assessed a 40% likelihood of the market undergoing a retracement before resuming its upward trajectory for the year. This probability has risen from the previous estimate of 35%.

Barclays Plc strategists noted in a recent report that systematic investors are positioned close to their maximum long positions in equities, and the phase of short-covering has run its course. This suggests a higher probability of them shifting to selling mode in the event of a volatility surge.

A key contributor to the uptick in monthly inflation was the increase in shelter costs, which rose by 0.4%, leading to a 7.7% surge compared to the previous year. Adjusted for inflation, real wages experienced a 0.3% monthly boost and a 1.1% year-on-year rise.

Looking ahead to this week's developments, notable events include the release of U.S. retail sales data for July, scheduled for Tuesday. Furthermore, the publication of the Federal Open Market Committee (FOMC) minutes is set for Wednesday.

Nasdaq continues the selloff and closes near 15,000. If this support level is broken, the subsequent target could be 14,800 where the median line of the long bullish trend plays as support/reistance for the last 5 times.