Stock futures flat after previous day selling

DJIA futures nearly flat, trading down 20 points before the market open. We have major bearish pressure yesterday as DJIA down more than 600 points. It could be the initial sign of bearish correction after prolonged bullish movement. If the bearish pressure continues to increase then DJIA might test 30,000 handles soon.

Traders’ attention mostly focuses on the implosion of hedge funds who were caught in the short squeeze of Gamestop (GME). The event might lead to covering in other stocks to raise cash.

Asian & European Stock market

The Asian stock market moderately lower. Japan stock market down 437.79 points (-1.53%) to 28,197.42, China stock market down 68.17 points (-1.91%) to 3,505.18 and Australia ASX 200 down 130.90 points (-1.93%) to 6,649.70 . The European stock market also retreat. DAX Germany down 0.76%, UK FTSE down 0.95%, and Euro Stoxx600 down 0.75%.

Technical Analysis

Dow Jones Industrial Average (INDU)

DJIA fell with strong bearish momentum as the market interpreted that the Fed will start light-tapering. The index closed near the daily SMA 50 where it will attempt to bounce. Under current bearish pressure, it is better to avoid taking long positions in equity and let the index test 30,000 handle or lower.

Lululemon Athletica Inc (LULU)

LULU share prices have broken below the triangle pattern shown on the chart. It tested the daily SMA 200 and formed a bullish pin bar pattern. We think a bounce is possible to retest the bottom of the triangle. After that, the share prices might resume its bearish movement and target the level below daily SMA 200. The level around $260.00 – $285.00 will become the focus if a bearish breakout happens.

Schlumberger (SLB)

SLB share prices pulled-back below the daily SMA 50 and set to continue its weakness to target daily SMA 200 and $20.00 handle. When the share prices testing the support levels, traders will observe the reaction. Long positions could be taken when there is a major bullish reaction.