Technical Analyst, Saxo Bank
Summary: Nasdaq 100 uptrend ticking higher despite weakening strength, lifted by Big Techs
S&P 500 almost flatlined and needs break out from range for direction
Russell 2000 could be testing 1,700 key support. Spread versus S&P 500 and Nasdaq 100 increasing
It is primarily the Big Cap companies such as Apple, Meta, Amazon and Microsoft keeping the market afloat pushing the Nasdaq 100 higher.
Nasdaq 100 is slowly crawling higher towards strong resistance at around 13,700. Whether the Index will actually reach that level is debatable.
RSI is positive but with divergence, the Strength Indicator is not supporting the higher Index levels, but the trend is your friend (unless it is about to end)
First sign of the uptrend is about to end would be a bearish break of the lower rising trendline. If combined with RSI closing below its rising trendline the signal would be even stronger.
To confirm the short-term uptrend has reversed a close below 12,938 is needed.
S&P 500 is almost flatlined lately. Range the Index needs to break out of for direction is still 4,195 and 4,050.
A close above 4,195 would cancel the Gravestone Doji Top and Reversal pattern and pave the way to 4,300. Close below 4,050 there is support at 4K and 3,910
RSI is moving below its falling trend line. A close above would be an indication of the upper Index range to be tested.
Spread Russell 2000 vs Nasdaq and S&P 500 expanding
From the below chart we can see how the Spread between S&P 500 and Russel 2000 and the spread between Nasdaq 100 and Russel 2000 has been developing
From 2021 to 2022 the Spread was expanding between Russell 2000 vs. the two other indices with Russell outperforming the other two Indices.
After the Markets peaked in Q4 2021 Nasdaq 100 has outperformed.
The spread between Russell 2000 and S&P 500 and Nasdaq 100 decreased until Q4 2022, were Russell started struggling to keep up with the bounce in S&P 500 and especially Nasdaq This is resulting in the spreads again to expand.
Money is flowing out of small and mid-caps. One of the reasons is of course that the struggling banking sector has more weight in Russell 2000 Index than in S&P 500 and Nasdaq 100.
However, as mentioned in previous Technical updates Russell 2000 outlook is bleak. Similarities to 2007-2008 is described here: Russell 2000 drawing 2007 pattern
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.