What’s inside:
- U.S. indices break down out of bearish patterns
- Nasdaq 100 the cleanest of the trio, heading lower within descending channel
- Key levels for each index outlined
Will the rally in U.S. markets continue in Q2? Check out the equity markets forecast for our analysts’ outlook.
The other day we looked at bearish technical developments forming on the hourly chart in the major U.S. indices (S&P 500, Nasdaq 100, Dow). Today, we’ll revisit those charts and see where we are and what they are suggesting in the near-term.
Nasdaq 100
The Nasdaq 100 had the cleanest head-and-shoulders pattern of the trio, so we’ll start there. On Tuesday, the neckline of the pattern was broken during the morning and later retested in the afternoon and again yesterday morning. So far, the 100 index is holding below this key level of resistance around 5400, suggesting the H&S formation will continue to see the market lower. It is also trading within the confines of a channel off the 4/5 highs, which we will use as guidance moving forward. Stay within, it is expected a drop towards 5316 will unfold. Break above and reclaim the 5400 mark and we’ll have to switch gears.
Nasdaq 100: Hourly
Created with TradingView
S&P 500
The S&P 500 broke the neckline on Tuesday, retested the same day and has pulled off since. It has a developing downward channel, like the Naz, which we will utilize moving forward. A break below 2337 will constitute a lower low, with an eventual move towards 2322 expected. A break above the top-side parallel and neckline will be required to tilt the picture more positively.
S&P 500: Hourly
Created with TradingView
DOW
The Dow had a similar H&S configuration as the other two indices, but with a twist. Omitting the brief spike on 4/5, a wedge took shape. In any event, the lower trend-line broke along with the other two indices and is also contained within a descending channel. A break of 20512 will constitute a lower low and we will look for a drop towards the 3/27 low at 20412 or worse.
Dow: Hourly
Created with TradingView
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---Written by Paul Robinson, Market Analyst
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