30.04.202110:05 Forex Analysis & Reviews: US stock market may face correction

S&P500

Yesterday, the US main stock indices showed a confident rise after a strong report on the US GDP for the first quarter (+6.2%), quite positive employment report (the number of continuing claims remained around 3.6 million), and the Fed's decision to follow the current policy. Yesterday, the Dow Jones Industrial Average index and S&P500 added 0.7%, whereas NASDAQ advanced by 0.3%.

Amazon, one of the leaders in the technological sector, in the first quarter, raised its income threefold by $8 billion or 44% to $108 billion.

At the same time, Asian stock market declined by 0.8% despite strong data from Japan.

India reported on the largest number of new virus cases. Thus, the daily increase was 400,000, whereas the number of dead people totaled 4,000. Global markets are ignoring this fact. During the third coronavirus wave, the global daily increase in the number of new cases totaled 900,000 that is 8% higher than in January. In France and Germany, the number of new virus cases is 25 thousand a day. The vaccination program has not yet stopped the virus spread.

S&P500 is trading at 4,211. According to the forecast, the index will hover between the levels of 4,160–4,230. The US stock market is likely to face correction. Market participants have already priced in all important reasons for a rise. Experienced traders are locking in profit and expecting a slump.

The US dollar index settled at 90.65. It stopped falling and now, it is hovering above 90.00. If the correction begins, it is likely to jump.

USD/CAD is trading at 1.2285. The Canadian dollar continued growing against the US dollar, after breaking the support level of 1.2360. As there are no reasons for an increase, investors are waiting for a slide in the Canadian dollar. That fact is that it advanced amid a weakening US dollar and high oil prices. However, a too strong Canadian dollar may have a negative impact on trade with the US. This fact is likely to halt the Canadian dollar's rise.

Conclusion: Markets have received important data. The US stock market may enter the correctional phase.