Risk sentiments staged a strong rebound overnight after Fed announced to expand the so called Second Market Corporate Credit Facility. Fed will starting buying a “broad and diversified portfolio of corporate bonds to support market liquidity and the availability of credit for large employers.” The SMCCF will crease a portfolio made up of all bonds in the secondary market that satisfy the facility’s minimum rating, maximum maturity, and other criteria. The indexing approach will complement SMCCF’s current ETF purchases. .
DOW once declined over 760 pts but ended up 157.62 pts or 0.62% at 25763.16. S&P 500 also reversed earlier loss to day low of 2965.66, and closed up 0.83% at 3066.59. SPX somewhat drew support from 55 day EMA and recovered but is kept well below last week’s gap. We’d expect corrective pattern from 3233.13 to extend for the near term. Another decline will remain in favor to 38.2% retracement of 2191.86 to 3233.13 at 2835.36. Reactions from there would determine the next move.
