An investor monitors stock prices at a securities exchange firm in Shanghai, China. (Photographer: Qilai Shen/Bloomberg)

Last Line of Technical Defense Under Siege Across Risk Assets

(Bloomberg) -- Risk assets are under siege, pushing everything from Chinese stocks to copper to cryptocurrencies to the verge of their last technical line of defense -- and beyond.

The S&P 500 Index shot through its 200-day moving average Monday, a line of support it held in February and March. The gauge is now down more than 10 percent from its January record.

“The reason we’re still concerned is that the 200 DMA is ALSO where the two-year trend-line going back to the early 2016 lows comes in!” Miller Tabak + Co. equity strategist Matthew Maley wrote in an email. “A meaningful break below of the 200 DMA should indeed be important on BOTH a short AND an intermediate-term basis for the stock market.”

But that’s far from the only place where technicians are preparing to gaze into the abyss. A pair of U.S. tech titans are trading in technically precarious ranges: Apple Inc.’s about 2 percent above its 200-day moving average, while Alphabet Inc. is trading right on top of this support line.

Facebook Inc. broke through this threshold when the Cambridge Analytica scandal exploded, and has closed below its 200-day moving average ever since. But most of the technology heavyweights are still well above this technical level thanks to their steady advance over the past year. Inc.’s still trading above its 100-day moving average, as are Microsoft Corp. and NVIDIA Corp. Netflix Inc. and Intel Corp. also opened above their 50-day means on Monday.

President Donald Trump’s renewed focus on trade with China has increased pressure on firms listed on the Chinese mainland. His plan to impose tariffs on the world’s second-largest economy caused the Shanghai Shenzhen CSI 300 Index to plunge, and it remains stuck below its 200-day moving average. A Guggenheim exchange-traded fund that holds Chinese tech stocks are also closing in on that level.

Bitcoin bulls are probably happy to see the calendar flip to April from March. Last month, the cryptocurrency’s 50-day moving average pierced the 100-day, while the price plunged below $7,000 to breach the 200-day moving average near the end of the first quarter. March was the worst month for bitcoin since 2011.

Europe also hasn’t escaped the trend. Ten-year German bund yields more than doubled -- albeit from a low base -- in the first half of the first quarter. Their steady retreat since Feb. 8 has put them on a collision course with the 200-day moving average, which was encountered last Wednesday amid signs that growth across Europe is decelerating.

Italy’s FTSE MIB Index has been oscillating above and below its 200-day moving average line since the March general election, amid elevated economic uncertainty and political paralysis. Short and longer-term moving averages appear to be converging for this equity benchmark.

The fact that the euro-yen cross continues to trade below its 200-daily moving average -- a “technically critical’ threshold -- is a sign that risk aversion lingers in markets, according to Scotiabank’s chief FX strategist Shaun Osborne.

Copper is supposed to be bellwether for global activity. The commodity barely managed to end March above its 200-day moving average after holding below the threshold over the past week for the first time since 2016.

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