Market Meltdown: Dow & Nasdaq 100 Plummet Following Fed Decision, Hang Seng Continues to Struggle
Dow Jones, Nasdaq 100, Hang Seng Analysis and Charts
Dow retreats from record highs
The index has fallen back from all-time highs and is currently testing trendline support from the mid-January low.In the short term, a break of support could test the area around 37,840, which was the late December high. Below this comes the 37,100 area that marked the low at the beginning of January.
A close back above 38,500 would put the price on course to hit new record highs.
DowJones Daily Chart
| Change in | Longs | Shorts | OI |
| Daily | 3% | -6% | -4% |
| Weekly | -25% | 12% | 4% |
Nasdaq 100 drops following Fed decision
Further weakness in the wake of the Fed decision comes following losses earlier in the week after Alphabet and Microsoft earnings.Trendline support from early January comes into play around 17,150, and a break of this would then target the 16,630 area, which formed support in mid-January. The 50-day simple moving average (SMA) could also form support once more.
A rebound above 17,400 puts the price on course to target the previous highs.
Nasdaq100 Daily Chart
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Hang Seng heads lower
Despite various new items around state support for the stock market, and a recent cut to bank reserve ratios, the Hang Seng continues to head lower.The most recent rebound carried the price back above 16,000, but then it has faltered below the 50-day SMA. Continued losses now target the late January low at 14,778. Below this lies the 14,581 low of October 2022.
A short-term rebound could target 16,000 once more, and then towards the 16,300 zone that marked resistance last week and earlier in January.
Hang Seng Daily Chart
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The stock market can be a volatile and unpredictable beast, with ups and downs that can leave even the most seasoned investors scratching their heads. This week has been no exception, as the Dow and Nasdaq 100 saw significant drops following the Federal Reserve’s decision to leave interest rates unchanged. Meanwhile, the Hang Seng index in Hong Kong continues to struggle with its own issues, indicating that the global economic climate may be facing some serious challenges.
What Happened with the Fed Decision?
On Wednesday, September 22nd, 2021, the Federal Reserve announced that they would not be raising interest rates. This decision came as a surprise to many, as the market had been anticipating some indication of a shift in policy. However, Fed Chairman Jerome Powell stuck to the stance of keeping rates near zero until maximum employment is reached and inflation stabilizes at 2%.
The market’s response to this announcement was swift and harsh, with the Dow and Nasdaq 100 both plummeting. The Dow Jones Industrial Average saw a drop of 1.3% while the Nasdaq 100 fell 2.4%. This dip in the stocks was seen as a reflection of investors’ concerns about the future of the economy and the potential impact of continued low-interest rates.
This decision also had a ripple effect on other markets, such as the bond market, where the 10-year Treasury yield rose to its highest level in three months. This rise in yields indicates that investors are becoming increasingly nervous about the long-term effects of low-interest rates on the economy and are seeking higher returns on their investments.
Hang Seng Continues to Struggle
While the news from the Fed may have caused a stir in the US stock market, the situation in Hong Kong’s Hang Seng Index is another cause for concern. This index, which is composed of 50 of the largest and most liquid companies in Hong Kong, has been on a downward trend since February of 2021. And recently, it has seen its biggest drop in three weeks, falling 2.3%.
One of the main factors contributing to the Hang Seng’s struggles is the ongoing regulatory crackdown in China. The Chinese government has been cracking down on various tech companies for antitrust violations and data privacy concerns, which has had a significant impact on the sector’s share prices. This uncertainty and regulatory pressure have led to a general sense of unease among investors, causing them to lose faith in the market.
What Does This Mean for Investors?
The market’s reactions to the Fed’s decision and the situation in Hong Kong are a sign that market volatility is here to stay. It is essential for investors to be prepared for any potential market meltdowns and be aware of the potential implications for their portfolios. Here are a few tips to help investors navigate the current climate:
• Diversify your portfolio: One of the best ways to protect yourself from market volatility is to have a well-diversified portfolio. This means holding a mix of stocks, bonds, and other assets to spread out your risk.
• Stay informed: Keep an eye on market trends and news to stay informed about potential market shifts. Being aware of what’s happening can help you make informed decisions about your investments.
• Have a long-term mindset: It’s crucial to remember that the stock market is a long-term game. While short-term dips and drops can be alarming, staying invested and having a long-term mindset can help you weather any storm.
• Consider seeking professional advice: If you’re feeling overwhelmed or unsure about the markets’ current state, it may be helpful to seek guidance from a financial advisor. They can help you make informed decisions and create a plan that aligns with your investment goals.
Final Thoughts
In conclusion, the recent market meltdowns in the US and Hong Kong serve as a reminder that the stock market is inherently unpredictable. By staying informed, diversifying your portfolio, and seeking professional guidance, investors can better prepare themselves for any future market downturns. With a long-term mindset and a well-thought-out investment plan, investors can potentially navigate through turbulent times and come out stronger.
