The pessimistic forecast of the analyst: the flagship index of Wall Street is on the way to declines

Trading on Wall Street closed yesterday with sharp declines, against the background of the surge in oil prices following the Israeli attack on the large gas facility in Iran and the increased fears of an inflationary outbreak in the US. The American flagship index fell by about 1.4% yesterday to a level of 6,624 points, within touching distance of its 200-day moving average, which stands at 6,615 points. At the same time, the Dow Jones index is tilted Industrials weakened by about 1.6% and the Nasdaq lost 1.5% – both closed below their 200-day moving averages.

Recall that a moving average is a technical indicator that indicates the general direction in which the market is going, and is performed by taking the averages of the closing prices of an index over a specified period of time. Thus, the indicator reflects the general trend of the stock markets, while cleaning up abnormal fluctuations that occur from time to time. A downward break below the 200-day moving average may signal that a longer-term downtrend may begin.

Yonatan Krinsky, chief market strategist at investment bank BTIG, told Marketwatch that this is the third time the US flagship index has tested the 6,600-point level since October, and that if the index falls in trading today, it may break below this critical support level (a support level is a level at which demand usually becomes strong enough to stop further declines). According to him, from a technical point of view, if this support level is broken, there is a reasonable possibility that the S&P 500 will further fall all the way down to the 6,000 point level.

“We have little confidence that the 6,600 point level will hold as support,” Krinsky wrote. “The November low of 6,521 points is probably more important, but we continue to see a greater downside risk and believe there is a reasonable chance of a move towards the 6,000 level.”