Dow Jones & Nasdaq 100 Forecasts: Mixed
- The Dow Jones pushed to new heights with conviction last week as it presses toward 35,000
- The Nasdaq 100 struggled with fundamental headwinds and remains beneath key resistance
- Stock Market Forecast for the Week Ahead: Reflation Trade Reignited
Dow Jones Technical Forecast
Outlook: Bullish (At Risk of Consolidation)
The Dow Jones tagged a new record last week after the Industrial Average broke above prior highs and rocketed toward 35,000. With encouraging fundamentals behind it, the Dow can look to extend its charge higher and enjoys minimal overhead resistance. On the other hand, past highs and prior resistance may serve as support going forward if broader risk aversion spikes.
Dow Jones Price Chart: 4 - Hour Time Frame (June 2020 – May 2021)
If anything, the Dow is at risk of overextension but since few things are more technically encouraging than new all-time highs, stamping a bearish outlook on the index would be rather presumptuous at this time. Still, traders should exercise caution when considering long exposure in the Dow Jones and profit-taking may be warranted after recent gains.
The Trend is Your Friend: Forex Trendlines
That being said, the longer-term outlook remains constructive as long as the Dow trades above the upper-bound of its ascending channel from June. A break beneath the trendline and 34,000, both of which reside roughly 3.2% beneath Friday’s close, could see the index fall into range-bound price action.
Nasdaq 100Technical Forecast
Outlook: Neutral
The Nasdaq 100 was absent during last week’s record-setting run as technology stocks succumbed to fundamental concerns and the index struggled with resistance. Initial support around the 13,730 mark was broken early last week as the index fell further and sought out secondary assistance around the 13,400 mark. The supplementary zone coincides with prior highs established throughout March and is a formidable technical level at this stage.
Nasdaq 100 Price Chart: 4 - Hour Time Frame (December 2020 – May 2021)
Price action late last week would suggest the Nasdaq 100 has regained its footing for the time being. That said, Friday’s close is dangerously close to support and a volatile start to trading in the week ahead could see price gap above or below the level with ease. Either way, it can be argued the Nasdaq is exhibiting early signs of range-bound trading.
To the topside resides the potential range’s upper limit around the index’s all-time high at 14,075 followed by the midpoint around 13,730 and the lower limit near 13,400. While the Dow Jones looks to continue higher, the Nasdaq 100 may have to negotiate resistance before it can join in on the rally. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
--Written by Peter Hanks,Strategist for DailyFX.com
