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S&P 500 Remains Constructive, Nasdaq 100 Attempting to Build Bullish Pattern

S&P 500 Remains Constructive, Nasdaq 100 Attempting to Build Bullish Pattern

What’s inside:

  • S&P 500 reversed Monday after falling through 8/8 high to keep upside intact
  • Nasdaq 100 holds April trend-line, possibly building an ascending wedge
  • Overall bias is bullish as long as recent lows hold

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On Monday, we saw the S&P 500 drop below the 8/8 intra-day record high on the back of tension flaring up yet again between North Korea and the U.S., but the dip was bought and resulted in the market closing with a minor reversal day and back above the August high. As we discussed in the Tuesday’s webinar, this keeps our focus on the top-side and sideways at worst as long as the Monday low at 2488 holds. Turning our focus higher, the next area we’re looking to as resistance comes in over 2520, where a top-side trend-line extending higher since March arrives. If may not be the most substantial form of resistance, but could at least put a pause in any upward momentum we see from here. Beyond the March line another 15-20 handles higher is the June top-side trend-line. As long as 2488 holds so does a bullish bias. Should that break then we would be forced to reconsider the near-term outlook.

S&P 500: Daily

For the following scenario to take shape in the Nasdaq 100 we will need a little more time, but soon an ascending wedge could take form. Given the nature of ascending wedges (higher lows, flat tops) and the overall trend, a top-side breakout would be the most likely outcome. We’ll revisit again soon should the formation mature towards becoming a reality. But for now, like the S&P, as long as the Monday swing-low at 5840 holds then the index looks poised for higher prices. The Monday swing lower found support by way of a trend-line rising up from April, so this will become an increasingly important line to watch. The next area of resistance to worry about comes in around the psychological 6k level.

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Nasdaq 100: Daily

---Written by Paul Robinson, Market Analyst

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