Fairlead Strategies Report

Fairlead Strategies has released a report highlighting potential weaknesses in the U.S. stock market, particularly indicating that the S&P 500 may face a deeper pullback in the coming weeks.

The research firm, which emphasizes technical analysis, identifies a notable weakening of short-term momentum, as shown by the daily Moving Average Convergence Divergence (MACD), a key market indicator. According to the strategists:

“The SPX has seen short-term momentum weaken notably per the daily MACD, putting it at risk of a deeper pullback over the next 2-6 weeks.”

Initial support is estimated to be around 5430, but the report suggests this level may be at risk, with potential retests near 5200. The loss of short-term momentum is widespread, impacting both small and mid-cap benchmarks.

Additionally, the report mentions Japan’s Nikkei 225, which has experienced over a 5% decline this week, prompting negative adjustments in short-term indicators. This raises concerns about the Nikkei potentially retesting its key support level, currently around 34,000.

Long-term gauges indicate that Japanese stocks may enter a period of range-bound trading that could continue for several months, even while maintaining their overall upward trend.

In the commodities sector, Crude Oil WTI Futures are showing signs of a potential rebound after a recent ‘buy’ signal indicates oversold conditions. Analysts are observing whether WTI can reclaim support around $75 per barrel; failure to do so might lead to a significant downturn, confirming a long-term downward triangle pattern in crude oil prices.