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Dow Jones, S&P 500, Nasdaq 100 Technical Outlook Reaches Pivotal Spot

Dow Jones, S&P 500, Nasdaq 100 Technical Outlook Reaches Pivotal Spot

Paul Robinson,
What's on this page

U.S. Indices Technical Outlook:

  • S&P 500 may be nearing end of bounce-mode
  • Nasdaq 100 struggling to trade above 200-day MA
  • Dow Jones lacks the same look, but will follow rest of market
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Dow Jones, S&P 500, Nasdaq 100 Technical Outlook Reaches Pivotal Spot

The S&P 500 just turned back down from the Feb 2 high, perhaps forging a stronger ceiling for the market to get through. This comes within the context of what I believe to be a counter-trend move and not the beginning of another bull-leg higher.

A lower high from the Jan record high is anticipated and could even set up a nice-looking head-and-shoulders pattern, in not only the SPX but NDX as well. It could take some more time before the recovery bounce is ultimately finished, but for now working with 4595 as resistance.

To give the downside some legs and a break is seen as needed below 4451, the Feb low (creating a lower-low), and the 200-day moving average. The two technical thresholds are currently in exact confluence.

At that juncture the possibility of a maturing H&S pattern comes to the forefront with the right shoulder taking shape. It will still take a break of the neckline (dotted red line in chart) to fully trigger the pattern. For now, using both noted short-term levels as action points.


S&P 500 Daily Chart

S&P daily chart

S&P 500 Chart by TradingView

The Nasdaq 100 head-and-shoulders has it in even a more vulnerable spot given how it tilts lower on the chart and the fact that the NDX is trading outside of the bull channel dating to September 2020. The breaking of the bull channel during the last sell-off is considered a significant event.

In the near-term, the 200-day moving average is presenting to be problematic as we discussed last week. The inability to rise above 15052 and the Feb 2 high at 15196 will continue to make that area a focal point as a ceiling and possible right shoulder to the H&S formation. A breakdown below 14452 will help tilt the picture towards a neckline test, at the least.

Nasdaq 100 Daily Chart

Nasdaq 100 daily chart

Nasdaq 100 Chart by TradingView

The Dow Jones made a slight short-term higher-high, continuing to demonstrate relative strength compared to the NDX and broader SPX indices. This may very well continue to be the case, making it a more difficult short in the near-term. But if we are to see true risk-off, then the Dow will at roll over at some point with a similar vigor as the broader market. The high in the near-tern to watch is 35824 and the low is 34799.

Dow Jones Daily Chart

Dow Jones daily chart

Dow Jones Chart by TradingView

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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.