published Oct 11, 2018, 6:42:59 PM, by Livia Yap
(Bloomberg) —

U.S. equity futures staged a mild bounce after the worst two-day slump since February as technical levels continued to exert outsize influence on the stock market.

December contracts on the S&P 500 Index climbed 0.6 percent in early Asian trading Friday, trimming the cash market’s 2.1 percent decline. An exchange-traded fund tracking the index is up more than 1 percent since the New York close. Futures on the Nasdaq 100 gained 0.7 percent, while contracts on the Dow Jones Industrial Average climbed 0.5 percent.

Stock trading turned extra volatile Thursday as the S&P 500 neared and then fell through its 200-day moving average, a chart line that has put a floor under several selloffs earlier this year. The cash benchmark closed almost 1.4 percent below the level Thursday, the most since 2016. Futures for benchmark index are still trading below their own 200-day mark.

“My best guess is that it’s technically motivated given how low the market has gone,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. “If you look at RSI, technically the U.S. stocks are more oversold than in February.”

The 14-day relative strength index on the S&P 500 dipped below 30 this week, a level frequently seen as oversold.

The rally in futures comes after U.S. Treasury Department’s staff advised Steven Mnuchin that China isn’t manipulating the yuan as the Trump administration prepares to issue a closely watched report on foreign currencies, according to two people familiar with the matter. “There is the story about U.S. Treasury staff said to find China isn’t manipulating the currency, that is probably having an effect,” Oliver said.

To contact the reporter on this story: Livia Yap in Singapore at lyap14@bloomberg.net To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net Chris Nagi
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