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S&P 500 & Nasdaq 100 Outlook: Falling Apart, but May Bounce Soon

S&P 500 & Nasdaq 100 Outlook: Falling Apart, but May Bounce Soon

Paul Robinson, Strategist

U.S. Indices Technical Outlook:

  • S&P 500 at new cycles lows, may find support at underside slope
  • Nasdaq 100
  • Levels to watch for the S&P 500, Dow, and Nasdaq 100

S&P 500 & Nasdaq 100 Outlook: Falling Apart, but May Bounce Soon

The stock market has been getting crushed these past few sessions, taking the market to a new bear market cycle low. The VIX is even getting a little jumpy as a bit of fear is starting to set in. Not real panic yet, but the kind that could soon mark an interim low for a bounce.

The thinking isn’t so much to play a bounce, although more aggressive traders may look to do that soon, but rather if you’ve been hitting it from the short side it may be time to button up trailing stops. Bounces in bear markets, while often short-lived, can be violent and painful if caught on the wrong side.

Aside from a minor amount of fear, a significant reason to look for the market to bounce is the S&P 500 futures are very near an underside trend-line from January. It ties in well with a slope from Feb, giving it more importance. The line of support has shown it’s worthiness over time.

It may get pierced before holding, but the area around 3715/700 could help post a low for the time-being. But again, this is more cautionary than a pounding the table bullish sentiment. It would appear we have a ways to go before that day comes.

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S&P 500 Daily Chart

s&p 500 daily chart

S&P 500 Chart by TradingView

The Nasdaq 100 has been the leader on the way up and on the way down over the years, and on that we will need to see the tech/darling heavy index catch a bit here. It doesn’t have quite the neat slope support at its feet right at this moment.

If the NQs are to reach their equivalent level as the ES, then the latter will likely breach support before reclaiming it.

This is where paying attention to price action will be critical – a strong reversal that doesn’t immediately fade will be the first signal that the market wants to bounce, whether that is from ES or NQ support. So until price action corroborates, these levels are just levels.

Nasdaq 100 Daily Chart

nasdaq 100 daily chart

Nasdaq 100 Chart by TradingView

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Whether you are a new or experienced trader, we have 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

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

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