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The S&P 500 fell by -0.45% on Wednesday, taking the index to 2,080 as a broad market sell off ensued on Wall Street.
Losses came as Head of the Fed, Janet Yellen, gave a speech at the Institute for New Economic Thinking’s Finance & Society Conference, questioning the current valuation of US equities.
Yellen made several comments regarding global equity and bond market valuations and warned onlookers that excessive stock valuations were a potential danger to market stability.
When IMF Chief Christine Lagarde chipped in with a question over equity valuation, Yellen said that the central bank did have concerns over financial stability and that markets were generally quite high. However, she also pointed out that policymakers were unconcerned about the formation of a bubble any time soon.
Climbers and Fallers
Within the S&P 500 itself, the best performer on the day was Western Union (WU), which gained 4.30% on a surge of heavy volume. The Colorado-based finance provider said it would not be merging with fellow competitor Moneygram and this was greeted with enthusiasm from investors.
Among the biggest fallers on the day, Microsoft Corp (MSFT) slid 2.77% as investors weighed up the permutations and likelihood of an acquisition of CRM platform Salesforce. Meanwhile, shares in drugmaker Pfizer Inc (PFE) closed down by about 2% as losses continued in the healthcare sector.
Technicals & Outlook
A few weeks ago I wrote an article on ADVFN, I was expecting a short term rally followed by a decline over a longer period of time. I said “we have now turned bearish with the current rally expected to end around 2,130. We are targeting an initial first move back to 2,070”. You can read the article here http://uk.advfn.com/newspaper/thierry-laduguie/34356/earnings-give-a-push-to-the-s-amp-p-500
Well, the high was 2,126 and right now the S&P 500 is trading at 2,070. There is now potential for a larger decline because the pattern is terminal and in five waves [1,2,3,4,5].
Thierry Laduguie is Trading Strategist at www.bettertrader.co.uk
