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S&P 500 and DJIA Look to Test Key Trendline, Mid-Term Election May be Catalyst

S&P 500 and DJIA Look to Test Key Trendline, Mid-Term Election May be Catalyst

2018-11-02 19:00:00
Justin McQueen, Analyst
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Equity Analysis and News

  • S&P 500 | Dead Cat Bounce?
  • DJIA | Trendline Support Back into Play

Price

200DMA

RSI

IG Sentiment

Europe

FTSE 100

7094

7462

61

Mixed

DAX

11518

12426

48

Mixed

CAC 40

5102

5354

49

Mixed

FTSE MIB

19390

21936

48

-

US

S&P 500

2711

2762

46

Bullish

DJIA

25164

25093

50

Mixed

Nasdaq 100

6941

7130

43

-

Asia

Nikkei 225

21912

22431

44

-

Shanghai Composite

2676

3023

59

-

ASX 200

5849

6067

51

-

S&P 500 | Dead Cat Bounce?

The S&P 500 had made a modest recovery following support at the rising trendline stemming from the 2018 low. However, topside resistance in the form of the 200DMA held firm and in turn sees the index paring back the highs of the week. Investors will be placing a keen eye on the Mid-Term elections which could see a jump in volatility for equity markets. Based on recent polling data and historical performances in Mid-Term elections, the Republican party are at risk of losing the Lower House to the Democratic, which may place pressure on US indices. Support in the S&P 500 is seen at 2690-2700, a break below raises scope for another test of the rising trendline. (Mid-Term Election Preview)

S&P 500 Price Chart: Daily Time Frame (Dec 2017Nov 2018)

S&P 500 and DJIA Look to Test Key Trendline, Mid-Term Election May be Catalyst

DJIA | Trendline Support Back into Play

Much like the S&P 500, the trendline support is back into play for the Dow Jones following the rejection off the 100DMA, while the price had also been notably exhausted above the 50% Fibonacci Retracement. Robust growth in the US, alongside, wages rising at its fastest pace since 2009 may stoke a more optimistic Fed on its current assessment on the US economy and thus adding pressure on US equity markets. Despite the recovery in equity markets, sentiment remains fragile and risks remain tilted to the downside.

DJIA Price Chart: Daily Time Frame (Dec 2017 – Oct 2018)

S&P 500 and DJIA Look to Test Key Trendline, Mid-Term Election May be Catalyst

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--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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