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Technical Update - S&P 500 & Nasdaq could cancel reversal patterns and extend uptrend despite warning signals

Equities 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  Technical analysis S&P 500/US500 & Nasdaq/USNAS100 could cancel reversal patterns and extend uptrend despite warning signals
Despite technical indicators suggesting the bullish trends are weakening S&P 500 top and reversal pattern could be cancelled today and uptrend to be extended. Lagging Nasdaq 100 could test last week’s peak shortly


S&P 500 has spiked to new 2022 highs two days in a row but has so far not managed to close above the Evening Doji top and reversal pattern (circled on the chart). To do that it requires at close above 4,579

But maybe today is the day it will do just that. Pre-market the S&P 500 future and the US500 cfd (see daily chart further below) are trading around 4,600 lifted by Meta trading +8% in Pre-Market after earnings release After Hours.

If S&P 500 is closing at or above 4,579 the top and reversal pattern has been cancelled and the Index is set for higher levels. Resistance at around 4,637.

However, there is divergence on RSI, MACD and traded volume. RSI and MACD values are declining and so is traded volume i.e., Divergence or imbalance in the market. In other words the uptrend is fragile and weakening. It is a warning sign but not a reversal signal.

If RSI closes above 76.36 the divergence is cancelled supporting even higher Index highs.

If buyers fail to close S&P 500 at or above 4,579 a correction will almost be a given. Support at around 4,455. First indication of a trend reversal would be a bearish break of the very short-term lower rising trendline

sp500 d 27jul
Source all charts and data: Saxo Group

US500 cfd:

us500 d 27jul


Nasdaq 100 has been lagging S&P500 lately but seems to be playing catch up. The future and USNAS100 cfd are trading 1% higher pre-market approx. 200 points below last week’s peak.

Nasdaq 100 is finding support at the short-term rising trendline and the Future/USNAS100 is bouncing from it.
If closing above 15,500 the uptrend is being extended towards 17K.

A close below 15,374 will reverse the uptrend. Divergence on RSI, MACD and Volume i.e., weakening of the uptrend

nasdaq100 d 27jul

USNAS100 cfd:

usnas100 d 27jul

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