Technical Analyst, Saxo Bank
Summary: Main US Equity Indices closed above key resistance levels Wednesday and is set for further upside. Short-term there could be 5% upside before strong resistance is met .
Medium-term uptrend is building close to be confirmed.
Today's Saxo Market Call podcast.
Today's Market Quick Take from the Saxo Strategy Team
S&P 500 closed yesterday above key strong resistance at 4,110 extending the short-term uptrend.
Daily RSI back above 60 supporting the bullish scenario that could lift the Index to minor resistance at around 4,230 which is also the 1.382 projection of the December correction. But there is Q1 potential up to strong resistance at around 4,308. 4,308 is also the 1.618 projection level.
Medium-term. If S&P 500 can close the week above 4,110 uptrend is confirmed. IF RSI closes above 60 threshold will further underlining the bullish outlook.
S&P 500 and weekly cloud. S&P 500 is in the cloud. Key cloud resistance is the upper Span B at 4,228 and the 100 weekly SMA currently around 4,210.
For S&P 500 to reverse the uptrend a close below 3,764.
To reverse on the short-term uptrend a close below 3,885 is needed
Nasdaq 100 rallied higher yesterday touching the upper trendline in the rising channel to close above key strong resistance at 12,167.
RSI indicates higher levels. Next key resistance at 12,740 which is also the 1.382 projection of the December bear move.
However, there is upside potential to 200% (2.00 projection) of the December downwards move to around 13,670.
For Nasdaq to reverse the trend short-term a close below 11,259 is needed.
Medium-term Nasdaq 100 is now in an uptrend. Weekly RSI needs to close above 60 for further confirmation however.
Strong resistance at around 12,740 and 13,565.
For Nasdaq 100 to reverse the uptrend a close below 10,675 is needed. A close back below the falling trend line would be first indication for this scenario to unfold.
Nasdaq 100 and weekly cloud. Nasdaq is still below the cloud. If rejected at 12,740 Nasdaq will be struggle to move into the cloud let alone breaking above. Next couple of weeks will be key.
Dow Jones Industrial touched and was rejected at the upper resistance in its trading range at 34,342. Range bound 34,342-32,573 scenario remains. A close above 34,342 is likely to fuel a rally to strong resistance at around 35,294-35,492.
RSI has been showing divergence for quite some time and currently it is below 60. A slide lower in the Dow is not unlikely.
However, Dow Jones is above its weekly cloud and seems to find support at the upper cloud Span B at 33,302. A weekly close below followed by a close below weekly 55 SMA can reverse the uptrend. Confirmation if closing below 32,573.
Small Cap Russell 2000 index was the leader of the uptrend closing above key resistance at 1,906 Tuesday. Yesterday touching the 1.382 projection at 1,976 but is set to continue higher to strong resistance and 1.618 projection at around 2,022.
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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.