U.S. Indices Highlights:
- S&P 500 working on corona gap-fill, but struggling
- Nasdaq 100 maintaining trend with important support at its feet
The S&P 500 has been stuck around the February 24 corona-gap, with it looking like today it might take another dip lower from it. The S&P will need to climb above 3258 if it is to run ahead and close the gap up to 3337.
If today’s current 1% gap down leads to further selling, then look to keep a close eye on trend-line support from the May swing-low that runs under the late-June low. This is just above a strong level of horizontal support running around the 3140-line, an area that went from a meaningful ceiling of resistance in June to meaningful support in July.
A break below this threshold will likely have the market on its backfoot towards a test of the 200-day at 3045. However, before thinking about more downside from there we will view it as a potential spot for dip-buyers to first look, then if it breaks turn the bias negative.
S&P 500 Daily Chart (struggling with corona-gap)
The Nasdaq 100 may hold the key to the next set of major market moves as half the index’s weighting consists of a handful of the world’s largest companies – Facebook, Apple, Amazon, Microsoft, Google. There is strong trend-line support from April with multiple inflection points. The low from Friday at 10313 is an important one to hold.
A break below support could lead to a decline back inside the long-term bull market channel dating back to 2010, seen on the weekly time-frame. The recent surge outside of the channel may end up as an 'overthrow’ that marks a significant exhaustion point. A decline below the daily trend-line/10313 level and drop back inside the channel may result in a sizable decline in the days/weeks ahead. But first we will treat the thresholds as support until broken.
Nasdaq 100 Daily Chart (trend-line/10313)
Nasdaq 100 Chart by TradingView
Nasdaq 100 Weekly Chart (‘overthrow’ from channel?)
Nasdaq 100 Chart by TradingView
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
