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Dow Jones/S&P 500/Nasdaq 100 Outlook:

  • Dow Jones consolidating (still has H&S potential)
  • S&P 500 also acting constructively
  • Nasdaq 100 – bonus macro-tech chart

See how the quarterly forecast has played out so far and what it could mean in the big picture – Q2 Equity Markets Forecast.

Dow Jones consolidating (still has H&S potential)

The Dow Jones sprinted from the monthly low, and with the past few sessions so far representing sideways price action at some point it may gear up for another move higher. It’s not yet a sturdy consolidation but working towards it, perhaps sometime next week.

The Dow may continue to try and use the mid-May swing high in the vicinity of 29957/877 as support. A few days above there could provide the launch pad necessary for a rise back to the April high or better up to the record high just under the 27k-mark.

In the event sellers show up in earnest, there is still room for a head-and-shoulders pattern to come to form. But the market will need to turn down very soon to keep symmetry of the pattern looking neat. I will revisit this scenario at a later time should the Dow start rolling lower towards the neckline and become a relevant scenario…

Check out the IG Client Sentiment page to see how retail traders are positioned and what it could potentially mean for various currencies and markets moving forward.

Dow Jones Daily Chart (Consolidating so far…H&S still on the table)

Dow Jones and S&P 500, Consolidate or Roll Over?

S&P 500 also acting constructively

The S&P 500 moving sideways could soon see a rally develop to the previous record high recorded in April. It’s not a bold call by any stretch of the imagination and with a little more time to build a base it becomes an increasing likelihood that we see the old record or better. Good short-term levels are difficult to find with the market in an extended position and limited movement in recent sessions. On hold for now…

S&P 500 Daily Chart (More consolidation could do good)

Dow Jones and S&P 500, Consolidate or Roll Over?

Nasdaq 100 – bonus macro-tech chart

This a macro-tech viewpoint. The Nasdaq 100 pulled off from a third push to a high which has in play a broad Reverse Symmetrical Triangle (RST). These are marked by increasingly larger swings (higher highs and lower lows) which demonstrate growing uncertainty. They are often thought of as topping patterns, but can lead to continuations in the direction of the broader trend as well.

So far, the bounce out of the first pullback from the high has been strong and suggest higher prices. We’ll find out soon, a breakout of the prior record of 7851 may spark an acceleration. To the contrary, this point in time is very crucial for the downside as well. If the current bounce rolls over and takes out last week’s low at 6936, it would be a strong indication that the pattern will lead to a swift sell-off.

Either way a big move may soon be in store as a resolution of the pattern could be nearing…

Nasdaq 100 Weekly Chart ('RST' pattern at critical point in time)

Dow Jones and S&P 500, Consolidate or Roll Over?

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.

Tools for Forex & CFD Traders

Whether you are a beginning or experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX