Technical Analyst, Saxo Bank
S&P 500 yesterday formed an outside day in the form of a bearish engulfing top and reversal candle; sellers took control from the opening bell and kept it throughout the trading session.
The chart is now sending mixed signals. RSI is still showing positive sentiment with no divergence, i.e., not indicating uptrend exhaustion. However, the bearish engulfing candle is a strong and reliable top and reversal pattern, strongly indicating a correction is likely to unfold.
A correction could take S&P 500 down to support and the 0.618 retracement at 5,101, with some support at 5,193. A daily close below 5,100 could establish an actual downtrend with potential to fall below 5,000.
For S&P 500 to cancel the top and reversal pattern and extend its bullish trend, a daily close above 5,342 is required. If that occurs, S&P 500 could push higher to 5,457–5,502.
Nasdaq 100 has formed a top and reversal candle. A correction is likely to unfold down to 18,168, possibly down to 17,808–17,712.
There is no RSI divergence, indicating this is merely a correction unfolding before the uptrend resumes. However, if Nasdaq 100 closes below 17,712, an actual downtrend could be in the cards.
A daily close above 18,908 will extend the uptrend with upside potential to 19,385.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.