The U.S. stock market could be in serious trouble as the final stretch of the year is here. The Nasdaq 100 is the primary index of concern, from there you can connect the dots. The DAX is pulling off resistance and may soon make good on a topping pattern. Crude oil is generally a mess, but the broader path of least resistance remains lower, especially if stocks start to tumble as they look like they might.
Technical Highlights:
- Nasdaq 100 technical posturing very important
- DAX rolling over from resistance, H&S to come to fruition?
- Crude oil remains difficult, but general bias is lower
Make more informed decisions by checking out our trading forecasts and educational resources on the DailyFX Trading Guides page.
Nasdaq 100 technical posturing very important
The U.S. markets could be in trouble soon. The Nasdaq 100, home to ‘FAANG’ (Facebook, Apple, Amazon, Netflix, and Google), in my view is the most important index on the planet. If some of the world’s largest most well-known companies (bull market darlings) are faltering then so it is the NDX, which means the S&P 500 is in trouble too, and if the broader U.S. stock market is trouble (55% global stock market capitalization), so is the rest of the world.
The NDX is teetering on the December trend-line that makes up the bottom-side of a large ascending wedge and intermediate-term head-and-shoulders pattern. A break here will be viewed as a catalyst for kicking off a major slide in Q4. Stocks down, vol up, trading conditions to improve markedly.
Nasdaq 100 Daily Chart (breakdown looks to be on the horizon)
Nasdaq 100 Chart by TradingView
For the Dow, watch the December trend-line and 200-day rising up, along with what could be the neckline of a lop-sided head-and-shoulders pattern. A break below these support levels should have the Dow rolling downhill and it also means the NDX is well below the aforementioned markers.
Dow Jones Daily Chart (rolling over)
Dow Jones Chart by TradingView
DAX rolling over from resistance, H&S to come to fruition?
The DAX is pulling off hard from the January 2018 trend-line, and with momentum as strong as it is more weakness is anticipated. It will take some time to complete, but the head-and-shoulders top under development might soon become a real thing. The trading bias is lower for the foreseeable future.
DAX Daily Chart (strong turn of t-line, right shoulder may be in)
Crude oil remains difficult, but general bias is lower
Crude oil is a difficult handle with cross-winds of geopolitical risks and stock market/economic weakness. Overall, while oil has been choppy and sporadic, the trading bias remains for lower prices. For now, it may be best to lay low until a good, clear set-up appears in favor of lower prices. Weakness could really being to accelerate soon if stocks roll over.
Crude Oil Daily Chart (choppy but looks headed lower)
Crude Oil Chart by TradingView
Resources for Index & Commodity Traders
Whether you are a new or an experienced trader, DailyFX has several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, and trading guides to help you improve trading performance.
We also have a series of guides for those looking to trade specific markets, such as the S&P 500, Dow, DAX, gold, silver, crude oil, and copper.
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
