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S&P 500, Nasdaq, Dow Technical Forecast: Seven-Week Slide Eyes Support

S&P 500, Nasdaq, Dow Technical Forecast: Seven-Week Slide Eyes Support

Michael Boutros, Strategist

S&P 500, Nasdaq & Dow Technical Price Outlook: Weekly Trade Levels

  • S&P 500, Nasdaq & Dow technical trade level update – Weekly Charts
  • SPX500 plunge testing key support zone near 3924
  • Nasdaq held above confluent support at 11520/768
  • Dow sell-off approaching key support at 30812
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Stocks have been in free-fall since breaking multi-year uptrend support early in the month and while the broader outlook remains tilted to the downside, the sell-off is now approaching areas of interest for possible near-term support in the week ahead. These are the targets and invalidation levels that matter on the S&P 500 (SPX500), Nasdaq (NDX) and the Dow Jones Industrial Average (US30) weekly technical price charts. Review my latest Strategy Webinar for an in-depth breakdown of these technical stock setups and much more.

S&P 500 Price Chart – SPX500 Weekly

S&P 500 Price Chart - SPX500 Weekly - SPX Trade Outlook - US500 Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; SPX500 on Tradingview

Technical Outlook: In last month’s S&P500 Technical Outlook we noted that SPX500 had, “turned from key technical resistance three weeks ago with the pullback now searching for a test of longer-term, uptrend support.” That slope broke the following week with the decline taking another 9% drop into confluence support here at the 100% extension of the yearly decline at 3924- looking for possible inflection here.

A break / close below is needed to keep the immediate short-bias viable towards the 38.2% Fibonacci retracement of the 2019 rally at 3812 and the objective 2021 yearly open at 3734- an area of interest for possible downside exhaustion IF reached. Initial resistance now eyed with the May open at 4140 backed by 4341. Bearishinvalidation now lowered to the 52-week moving average at ~4431.

Bottom line: The S&P 500 is poised to mark a seventh consecutive weekly decline with price now challenging confluent downtrend support- risk for a bear-market bounce here. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be capped by 4341 IF price is indeed heading lower on this stretch with a close below 3924 needed to keep the focus on objectives into the lower parallel near ~3800. Review my latest S&P 500 Near-term Technical Outlook for a closer look at the near-term SPX500 technical trade levels.

S&P 500 Trader Sentiment – SPX500 Price Chart

S&P 500 Trader Sentiment - SPX500 Price Chart - SPX Retail Positioning - US500 Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long the S&P 500- the ratio stands at +2.42 (70.72% of traders are long) – typically a bearishreading
  • Long positions are1.83% higher than yesterday and 8.58% higher from last week
  • Short positions are 4.60% lower than yesterday and 2.79% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests US 500 prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger US 500-bearish contrarian trading bias from a sentiment standpoint.

Nasdaq 100 Price Chart – NDX Weekly

Nasdaq 100 Price Chart - NDX Weekly - NAS100 Trade Outlook - Stock Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; NDX on Tradingview

Notes: The seven-week decline takes the Nasdaq into a key technical confluence at 11520/768- a region defined by the 100% extension of the yearly decline and the 50% retracement of the 2020 advance. Looking for possible price inflection here with a break / weekly close below needed to keep the immediate decline viable towards the 61.8% retracement at 10589. Initial resistance now at the 2021 low-week close (12668) with bearish invalidation now lowered to the April high-week close / upper parallel at 13860.

Bottom line: Nasdaq is testing confluent downtrend support for the second consecutive week. From a trading standpoint, a good zone to reduce portions of short-exposure / lower protective stops- rallies should be capped by 13000 IF price is heading lower on this stretch with a break from here keeping the focus on Fibonacci support at 10589.

Dow Jones Industrial Average Price Chart – US30 Weekly

Dow Jones Industrial Average Price Chart - US30 Weekly - DJI Trade Outlook - Stock Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; US30 on Tradingview

Notes: The Dow may be playing catch-up here with the index down more than 16% off the record highs. The decline is approaching confluent downtrend support at the 100% extension near 30812- looking for a reaction in price there IF reached with a break / weekly close below needed to keep the short-bias viable towards the 38.2% retracement / 2021 lows at 29794/856. Initial resistance now at the 75% parallel / March close-lows at 32944 with bearish invalidation lowered to the December low at 34006.

Bottom Line: We’re looking for a reaction on a drop into downtrend support at 30812 for guidance here. From a trading standpoint, look to reduce short-exposure on stretch towards confluent support- rallies should be capped by 32944 IF price is heading lower with a break below the keeping the focus on 29794.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Active Weekly Technical Setups

-Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

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

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