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S&P 500, Dow Jones, and Nasdaq 100 Technical Outlook: ‘Breaks’ Bought or Sold?

S&P 500, Dow Jones, and Nasdaq 100 Technical Outlook: ‘Breaks’ Bought or Sold?

Paul Robinson, Strategist

S&P 500/Dow Jones/Nasdaq 100 Technical Highlights:

  • S&P 500 backing down from resistance to 200-day
  • Dow Jones so far the weakest of the major indices
  • Nasdaq 100 pulling back, but holding up the best

Check out the forecasts for Global Stock Indices and other markets on the Trading Guides page.

S&P 500 backing down from resistance to 200-day

The market is as weak as it’s been since the December low, and not without warning as the S&P 500 pulls off solid resistance in the vicinity of 2800/17. While the past few days have brought with them the most aggressive selling in a while, it hasn’t been overwhelming.

Is this a shallow corrective pullback, or will we soon see sellers show up in earnest? The answer to that might lie in the next attempt to rally. Failure to see buyers emerge merely a pause in the decline off the highs could be the hesitation that leads to a stronger decline. Even a little bump higher that rolls over and makes a new low below whatever low we soon carve out would be a good indication that a larger decline is underway.

However, a push higher with few sellers and avoidance of rolling over will have the 2800/17 area back in focus. This will remain a significant ceiling for the market, and if a larger advance is to continue this zone will be an important threshold to overcome. Shorts might find it as another back-stop for good risk/reward bearish bets.

Macro-techs, with all the wild swings of the past 15 months, suggest the market could be undergoing a major long-term topping process. A couple of scenarios I’ll soon go into further detail include finding a high right about now (bringing into play a massive head-and-shoulders top) or not long after a new record high is achieved (setting up a – Reverse Symmetrical Triangle, or ‘RST’ since Jan ’18.) In either event, risk of a major fall-out is still quite high…

Stocks are rallying now, check out the longer-term view in the Global Equities Forecast.

S&P 500 Daily Chart (2800/17, 200-day, how will market respond?)

S&P 500 daily chart, 2800/17, 200-day, how will the market respond?

Dow Jones so far the weakest of the major indices

The Dow coming off the 26k-area has been the weakest of the major three indices. It’s broken down out of a rising channel, but we’ll need to see how a retracement of this move plays out (if one develops) to determine if selling could intensify. The 200-day sits at 25123, highs over 26k remain resistance.

Dow Daily Chart (out of channel)

Dow Daily Chart, out of channel

Nasdaq 100 pulling back, but holding up the best

While the NDX is back below the 200-day MA it has held up the best. It’s hard to say yet whether this a good sign for the market or not, but it is worth closely monitoring the relative performance of this index as it highlights the bull market darlings – FAANG (Facebook, Apple, Amazon, Netflix & Google). As noted back in September before the big swoon, how goes FAANG & the Nasdaq 100 goes the rest of the market.

Nasdaq 100 Daily Chart (holding up the best so far)

Nasdaq 100 daily chart, holding up the best so far

To learn more about U.S. indices, check out “The Difference between Dow, Nasdaq, and S&P 500: Major Facts & Opportunities.” You can join me every Wednesday at 10 GMT for live analysis on equity indices and commodities, and for the remaining roster of live events, check out the webinar calendar.

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---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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

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