Pay Attention To The Risk Of Stock Index Correction Recently

Driven by the easing of China-US relations and the relatively calm market news, US stocks rose steadily in the coming month, while the Nasdaq, as the leader, was even more brilliant, breaking through the high level in July this year.

However, with the decline of core stocks last week and the near high of S&P and Dow, it is necessary to pay attention to the risk of recent stock index correction.

In the watch list, one of the most important indicators is naturally Nvidia, a stock led by AI concept with unlimited scenery this year. We have also highlighted it before when it dropped from its high position and tested the neck line of the head and shoulder.

In short, NVIDIA's trend can be regarded as the leading indicator of Nasdaq to a great extent, and at the same time indirectly affects the overall performance of US stock index.

In terms of technical trend, NVIDIA's previous head and shoulder bottom was finally proved to be a finishing form rather than an effective breaking position, which helped the stock price set a new high again.

However, it is worth being cautious that last week (partly affected by holiday and year-end factors), the weekly line showed a reversed phagocytosis pattern, which implies that there is a possible double-headed combination, and of course it can also be repeated and revised before closing. In any case, there is no harm in being conservative because the breakthrough's effectiveness has not been confirmed.

Another reference factor, the S&P index, faces the challenge of double key suppression: the downward trend line resistance since the historical high and the weekly double suppression above 4600. There is no reversal signal in the current daily and weekly charts, so it may be too early to short. When the pressure is obviously high, it is also not recommended to be aggressive bullish.

There is also an indicator that is not an indicator in the performance of the US dollar. The correction after the US Dollar Index's small double head has reached the theoretical target position, and the Fibonacci support level is very close, so it may rebound at any time.

Although the negative correlation between US dollar and US stocks this year is not as significant as before, it will still have a certain impact if it is driven by unexpected news. Therefore, once the US dollar suddenly and obviously reverses/rises, it is necessary to guard against the pressure on US stocks. Crude oil, another key risk asset, has been weak recently, but the trend of copper price has eased, and the overall reference value can be ignored temporarily after dilution.

On the whole, considering the actual situation at the end of the year, the traditional Western holiday factors of Christmas + New Year usually lead to the weakening of market liquidity and light market, so it is more likely that the next January-1.5 months will be a consolidation and shock situation.

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