FxWirePro: S&P500 downside still open, rally could remain capped at 1970

According to us, at FxWirePro, US benchmark stock index, S&P 500 is still not out of the woods and we feel recent rally might remain capped below 1970 area. Bears could take even take back charge before that level. There is little to be optimistic about US stocks as of now, other than the fact that FED might delay its hike plan again.

However downside risks are much larger 

• Major focus of S&P 500 will be on earnings, which are largely expected to disappoint. Earnings growth has fallen to negative in 2015.
• Oil's rebound for last three days miniscule compared to slide. So no respite for US oil producers.
• Risk aversion, which has been stemming from China, has not abated. ECB's dovish announcement might only have pushed it into the future.
• ECB's easing is no direct help for US economy and stocks, investors might even choose to dump US stocks and head Europe.

So, while good mood could push S&P 500 to 1970 area, risk aversion could push it to as low as 1740.