Nasdaq 100, S&P 500, Dow Jones Technical Outlook for the Week: Momentum Slowing?

Nasdaq 100, S&P 500, Dow Jones, Technical Analysis – Week Ahead

• Nasdaq 100 closes at record high, but momentum seems to be fading
• S&P 500 futures also facing a similar situation, though gains smaller
• Dow Jones futures eye a retest of record high, will momentum follow?

Nasdaq 100 Technical Analysis

The Nasdaq 100 closed at a record high to start off this week, extending the dominant uptrend since last year’s Covid-induced bottom. Prices took out the key 14996 – 15172 resistance zone that had been in play since July. That exposed the midpoint of the Fibonacci extension at 15485. Above that price sits the 61.8% level at 15731 where beyond that sits the 78.6% point at 16080.

Negative RSI divergence is still present however, showing that upside momentum is fading. That can at times precede a turn lower. Such an outcome may place the focus on the 50- and 100-day Simple Moving Averages (SMAs). These could reinstate the dominant focus to the upside. Clearing the 100-day SMA could raise the risk of a more prominent correction, exposing the former 13829 – 14059 inflection zone.

Chart Created in TradingView

S&P 500 Technical Analysis

S&P 500 futures just barely managed to close at a record high on Monday, finishing at 4475 where the previous record was at 4474 on August 13th. This means that the 78.6% Fibonacci extension at 4486 still remains in play as immediate resistance. A rising trendline from April, acting as a ceiling, seems to be maintaining a fairly consistent slope of appreciation.

Negative RSI divergence is also present here, showing that upside momentum is fading. A turn lower could place the focus back on the 50- and 100-day SMAs. These may reinstate the dominant focus to the upside, where the 100% extension level may come into play at 4611. Otherwise, clearing the 100-day line may open the door to a material turn lower. That would expose lows from May and June on the daily chart below.

Chart Created in TradingView

Dow Jones Technical Analysis

Dow Jones futures started off on an upbeat this week, but prices remain under the August record close at 35534. That establishes the former as a prominent resistance level. Taking out the record high would expose the 38.2% level and midpoint of the Fibonacci extension at 36357 and 37425 respectively. Still, keep an eye on RSI, where negative divergence may continue to undermine the Dow’s push higher.

The 100-day SMA is sitting relatively close below. Confirming a breakout under this line may open the door to a material turn lower in the index. Such an outcome could place the focus on the July and June low at 33623 and 32902 respectively. Subsequently falling under these key price points may increase the risk of further losses, exposing the March 25th and March 4th low at 31951 and 30512 respectively.

Chart Created in TradingView

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter