U.S stock market under bearish pressure after debt downgrade

The downgrade of U.S. debt rating by Moody’s causing treasury rate to climb and put downward pressure on the stock futures. It seems a downward movement could happen to neutralize the current bullish run before the start of another bullish leg. Traders will remember that May usually the bearish month and as of now, we are moving on the bullish track. When the next bearish downturn happen, traders will use the chance to add long positions in stocks.

Technical Analysis

Dow Jones Industrial Average (INDU)

DJIA index extending the upward movement above the daily SMA 200 and not losing the bullish pressure yet. It might attempt to continue the bullish movement, however, traders will stay cautious for now. A bearish reversal could happen, and the index resume the bearish movement below daily SMA 200. On the other hand, the index might consolidate near the daily SMA 200 before developing new trending movement.

Occidental Petroleum Corporation (OXY)

OXY prices recovered after the major bearish break down. It is below the cluster of averages which suggest bearish trend. At the current time, the prices are making a pullback toward the averages and will test it. If there is bearish rejection with strong momentum, then traders could consider entering short positions with stop order above daily SMA 200. However, if the price could close above daily SMA 200, then the trend will turn bullish.