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US Indices: S&P 500, Dow at Crossroads Ahead of NFP

US Indices: S&P 500, Dow at Crossroads Ahead of NFP

Paul Robinson, Strategist

What's inside:

  • S&P 500 and Dow pressing into lower portion of resistance zone
  • NFP is not the focus, the price levels are
  • Likelihood of a reversal is high (within days), which may offer a solid short trade

NFP today, but so what

The indices, namely the S&P 500 and Dow, continue to press onward into the lower portion of the resistance zone we’ve been discussing this week. Today we have NFP, and what the number will be and how the market will react is anyone’s guess. So that is not the focus on this end, but rather the levels at hand. Resistance is in the neighborhood right now for two of the three main indices, with the Nasdaq 100 needing to trek a bit further to the north before running aground.

Upper bounds are upon us

The S&P 500 1990-2010 resistance zone is upon us, so we will be paying close attention to how the market handles this area. It has acted as support and resistance on numerous occasions since August. It is unlikely there won’t be a fight at these levels even if the market is to forge on to higher grounds. On a pop above price resistance it will quickly find the 200-day MA at 2020. This makes any type of key reversal event from here up to the upper end of the zone a spot of interest for establishing a short position. The area of focus in the Dow is between 16935 and 17100, and just above there is the 200-day MA at 17,150 should it trade on through. The Nasdaq 100 is unlikely to reach its respective resistance zone between 4450 and 4500 (200-day MA @ 4426) without the S&P pushing much higher.

Looking for a pullback to develop soon

How the next few days play out will be pivotal in determining our next move. The expectation is not for a top of significance at this juncture, but rather a healthy pullback from resistance, alleviating short-term overbought conditions. From there we can assess the reaction for further clues about what we should do next. We’re taking this one step at a time.

S&P 500/Dow Daily

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX, or email him directly at instructor@dailyfx.com with any questions, comments, or concerns you may have.

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

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