Chinese fall lifted the US?
On Friday, the S&P 500 closed 0.81%, the Dow Jones Industrial Average gained 0.65%, and the NASDAQ closed up by 1.19%.
Also, we should not forget that "About 56% of the S&P stocks are above their 50-day moving average, but that's down from about 92 or 93%," Chief Market Strategist David Keller at StockCharts.com told Investing.com in an interview on Friday.
There are two reasons that US stocks, especially NASDAQ, gained by the weekend, the changes that happen in China and the Chinese market and US tech giants.
Last week, Tech giants in the US gained because of the concern of another wave of Covid-19, while many other stocks lost for the same reason, however as the tech giants have more weight in leading indices, we can see the gain at the second half of the week.
On the other hand, we should not forget about what happened in the Chinese market.
On Friday, the Hang Seng fell 1.8% by a 5.8% weekly drop, the most significant fall since March 2020. On the mainland, the Shanghai Composite dropped 1.1% to its lowest close in more than two weeks on Friday, and Chinese blue chips fell 1.9%. With these falls, the Hong Kong index hit its 10-month low.
Also, these sell-off in the market, which Louis Tse, managing director of Hong Kong brokerage Wealthy Securities, call "herd mentality," generally caused a $560 billion wiped off from Hong Kong and Chinese mainland exchanges.
These capital flights mostly came after the Chinese regulator’s new plans and rules as an unrelenting series of Chinese regulatory shattered investors' confidence.
Cautious investors take their money to somewhere with lower risk when risk comes, which happened between Shanghai and New York.
Dave Wang, a portfolio manager at Invest Capital in Singapore: "There isn't one trigger, but many bits and pieces that add to the narrative to stay away from China, almost daily you have negative news coming out, so it forms the impression there's no end in sight."
From the technical side, the index is returned to its overall uptrend in the H4 chart. It is moving above 20 and 50 MA lines while the OBV trend line is also back to the bullish shape, and RSI was seen at 56. In the H1 chart, also all indicators remain bullish after earlier downtrends. Despite all fall in the short term, when we are checking the longer-term, as it is visible in the Daily chart, the price still following its general uptrend, by touching 50 DMA sometimes and again rebound from there. The same thing happened, and still, we are following the trend.