The US stocks were under continued pressure last week in another worldwide slide on China concerns.
More bad economic news out of China as a key indicator released on Friday 21 showed that the Caixin manufacturing PMI of the world’s second-largest economy contracted hitting its lowest level since 2009. The manufacturing PMI fell to 47.1 in August, below the 47.7 expected by investors. (A reading above 50 indicates expansion from the previous month, while a reading below 50 indicates contraction.).
Chinese stocks fell sharply last week in another volatile session. The Shanghai composite lost 4.2% as dull factory growth figures and the recent currency depreciation of the yuan have investors all over the globe worried about the world’s second-largest economy.
The UsaTec plunged more than 8.0% since the start of the month and fell 0.5% year to date and is in a distribution phase since the end of last week. The Index plunged during the course of last week, breaking two weekly supports and closed at the low of the week on high volume. The stochastic is showing bearish momentum and crossed below the 50 mid line.
Expecting downward move to Year lows at 4,053.25 on a break below previous week low at 4,188.75 (scenario 1) or a bounce off the weekly support at 4,118.25 may push the Index back up to a key level at 4,247.50 (scenario 2).
UsaTec is a CFD written over Nasdaq 100 futures.