Despite the continuation of the downtrend in the risk assets, signs of consolidation start bringing hopes that the stock markets may be approaching a bottom, with S&P 500 bouncing off session lows for the last few sessions. The FOMC meeting minutes to be released tomorrow could be a catalyst for investors to shake off the recent fears of a recession scenario, despite no clues for the Fed to change its rate-hike trajectory just yet, with more 50-basis points hikes on cards.
S&P 500 – Daily (a short-term rebounding opportunity to test the descending trend line)(Click to see the enlarged chart) Source: CMC Markets
In addition, according to CNN business Fear & Greed Index, the stock markets' emotions are pointing to the extreme fear, which usually indicates an opposite effect, a buying opportunity. And it will be only a rebounding opportunity as the downtrend is still in play.
Fear & Greed index
What is the CNN Business Fear & Greed Index? The Fear & Greed Index is a way to gauge stock market movements and whether stocks are priced. The theory is based on the logic that excessive fear tends to drive down share prices, and too much greed tends to have the opposite effect.