Technical Technical Technical

Technical Update - US Equity Markets

Equity 4 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Top and Reversal patterns across the board. Support levels under Pressure. 

Nasdaq 100 closed Friday below the important support at 15.638. Minor support at 15.508 which is where the Index touched before performing the Santa Claus rally. However RSI closed below 40 threshold indicating further downward pressure meaning elevated risk to the down side towards the 200 SMA around 15K.

 

Nasdaq 100 day 10 jan
Source: Saxo Group

Weekly time period: RSI has indicated divergence since November, MACD for the better part of 2021. With last week’s negative market Nasdaq has now formed TWO top and reversal candlestick patterns: Bearish Engulfing candle and an Evening Star like pattern. 15.508 support could prove crucial.

Nasdaq 100 w 10 jan
Source: Saxo Group

The USNAS100 CFD (Nasdaq 100 future) is hovering around the important support at 15.540. RSI also below 40 here. 

USNAS100 D 10 Jan
Source: Saxo Group

S&P500 is still holding on above the short term rising trend line and above the 55 SMA. However, RSI divergence also here indicating the Santa Claus rally was weak and is under pressure.

SP500 D 10 Jan
Source: Saxo Group

Weekly time period: S&P500 formed a Bearish Engulfing pattern as buyers couldn’t keep the Christmas rally alive. The medium term rising trend line could come under pressure in coming weeks. 4.495 seems to be crucial support for the .

SP500 week 10 Jan
Source : Saxo Group

Russell 2000 Small Caps got rejected at the 55 SMA last week and is again on the move towards important support at around 2.130. With the RSI indicator being rejected at 60 i.e. staying bearish sentiment a test of the support is likely.

Russell2000 D 10 Jan
Source: Saxo Group

RSI Divergence explained: When an indicator such as RSI is displaying lower peaks while the underlying price is still making new highs. It is a sign of imbalance in the market, the strength of the trend is weakening. It could be an indication of the ending of a trend. However, imbalances in financial markets can go on for quite some time. To cancel Divergence out RSI must either 1. Make a new high simultaneously with the price or 2. Close below 40 threshold. 
Same can be observed in bear market just here market makes a new low but Indicator doesn’t.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.