S&P 500 Index Dragged Down By Hedge Fund Default

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Written By: Eno Eteng (MSTA)

Mar 29, 2021, 17:54 BST 17:54

Nasdaq

Summary:

S&P 500 index opens lower this Monday, dragged down by the default in a margin call by a US-based hedge fund, as well as rising bond yields.

A combination of rising bond yields and the margin call issued on a hedge fund are driving the S&P 500 and other US markets lower this Monday.

A hedge fund, which has been identified as Archegos Capital, is said to have defaulted after getting a margin call on Friday, hitting the stocks of some of the biggest banks heavily. The decline in the financial stocks has sent the S&P 500 lower by 0.57% as of the time of writing. The index was down 1.2% at a point, but bulls have been able to pare some of the losses.

Technical Outlook for S&P 500 Index

Today’s decline met support at the 3950.4 support line. The picture on the daily chart is that of a double top, with the neckline at the 3870.0 support line. For the pattern to evolve into a downside correction, bears must take out the support levels at 3910.5, along with a breakdown of the 3870.0 neckline and the 3823.9 support, with 3765.1 serving as the price projection from the measured move.

On the other hand, a break of the double top allows the S&P 500 index to break into new territory, with 4005.9 serving as the potential initial target from the breakout move.

S&P 500 Index Daily Chart

Written By: Eno Eteng (MSTA)

Eno is a certified financial technician and member of the UK Society of Technical Analysts. He loves to trade and write about stocks, Forex, and CFDs. Since 2009, he has consulted several financial companies as a trader and strategy developer. His work can be seen on several forex blogs and trading educational websites.