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US Equities Q1 Technical Outlook: Stocks in Overbought Territory. Can It Continue?

US Equities Q1 Technical Outlook: Stocks in Overbought Territory. Can It Continue?

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S&P 500

From a technical standpoint, 2023 has been excellent for the S&P 500 as it flirts with the January 2022 highs just above the 4800 mark. This meteoric rise since November coincided with a dovish tilt regarding rate cut expectations, however even before that the S&P was enjoying a relatively positive year.

The technical picture is a little hard to read with immediate resistance resting at the previous high around the 4817 mark. A break beyond this level however makes it difficult as there is no historical price action to monitor with the 5000 psychological level likely to be the next big hurdle.

If a retracement does take place immediate support rested at 4639 and more resting just below at the 4600 area. There are further levels of support to the downside which could come into play as well which I will list below.

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S&P 500 Key Levels to Keep an Eye On:

Support Levels:

  • 4600
  • 4435 (20-day MA)
  • 4288 (50-day MA)
  • 4172 (100-day MA)

Resistance Levels:

  • 4817
  • 5000

S&P 500 Weekly Chart

image1.png

Source: TradingView, Prepared by Zain Vawda

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Nasdaq 100

The Nasdaq is even more difficult to read as we are already in uncharted territory as we have already printed fresh highs. If I am looking at the resistance levels up ahead, the lack of historical price action leaves us with little to look at. The effect of psychological levels is well documented hence why I believe the 17000 may prove a tough nut to crack and could lead to some form of retracement. Above this as well I only see potential areas of resistance around key psychological levels and round numbers.

If we do have some downside on the Nasdaq, the previous swing high around 15960 is the first key support area and could facilitate a bullish continuation. The 15950 level is about 700 points away which is a decently sized retracement, but if we do break below, then there is a host of support levels between the 15950 and 15000 handles.

Nasdaq 100 Key Levels to Keep an Eye On:

Support Levels:

  • 15950
  • 15328
  • 15000
  • 14750

Resistance Levels:

  • 17000
  • 17500
  • 18000
  • 18500

Nasdaq 100 Weekly Chart

image2.png

Source: TradingView, Prepared by Zain Vawda

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

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