Macro: Sandcastle economics
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Technical Update - Mixed picture in US Equities: S&P 500, Nasdaq 100 & Dow Jones Industrial
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary:
S&P 500 bounce facing strong resistance. 4,100 is key
Nasdaq 100 still depressed managed to keep itself above October lows but for how long. Strong overhead resistance levels. Index could be range bound coming weeks
Dow Jones Industrial broke short-term deadlock and is set for higher levels
S&P 500 tested the resistance at 3,906 Friday. A close above is likely to push the index to test the upper medium-term failing (black) trendline and 4.000.
S&P 500 could spike higher above 4K to 0.786 projection but needs to close above 4,100 to reverse the medium-term downtrend.
200 daily SMA which is declining provides some resistance. RSI is in bearish sentiment after it closed below 40 threshold 28the December (circled) and if the Index closes below 3,780 bear trend is set to resume with some support at 3,719.
Nasdaq 100 has managed to keep above October lows and could bounce to 11,360-11,450. Earnings season has been kicked off and Nasdaq could experience quite a lot of volatility next couple of weeks but could be caught in range between 11,450 and 10,481. Break out is needed for direction.
If moving higher to close above 11,450 Nasdaq 100 could test its medium-term failing (black) trendline.
However, indicators point to lower levels. RSI is showing negative sentiment and there is no divergence, 200,0100 and 21 daily SMA’s are all declining. A close below 10,481 could fuel heavy selling towards support at around 9,736.
Dow Jones Index broke the deadlock Friday by closing above 33,438 and now seems to be set for a re-test of 34,500 level. A close above is likely to push the Index towards next resistance at around 35,492.
The medium-term trend is up supported by positive RSI sentiment on weekly chart and a close above 35,492 will further add to the uptrend scenario.
To reverse the short-term uptrend a close below 32,581 is needed.
RSI divergence: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
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