Technical Update - S&P 500 & Nasdaq rebound cut short. Indices closed gaps and resumed down trend
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Friday US Equities closed gaps created earlier that week with a 0.382 Fibonacci retracement bounce of the September bear move.
S&P500 closed bang on previous old support at 3,636 and Nasdaq 100 closed spot on its previous support at 11,037, few cents off lows. Down trend has resumed and is likely to push the Indices lower over the next couple of weeks.
RSI on S&P 500 closed below 40 threshold indicating likely lower levels and if it closes below its lower rising trendline selling pressure is likely to accelerate pushing S&P 500 to support at around 3,500. However, the 3,500 level is not a strong support. S&P 500 is at risk to drop to the 0.618 retracement of the 2020-2021 uptrend and the lower level of the consolidation area back in Q4 2020 at around 3,200.
Short-term; If S&P 500 closes above 3,807 the Index could move strong resistance around 3,900
Nasdaq 100 closed just a few points above its September low is set for lower levels. Next key support is at 10,677, close to the 0.618 retracement of the 2020-2021 uptrend at 10,590. If Nasdaq closes below that levels the Index is at risk to penetrate 10K. 1.618 projection of the Q3 correction is at 9,378, a level that is not unlikely to be reached if earnings season starting this week becomes very disappointing to the market.
To reverse the downtrend Nasdaq 100 must close above 13,721. Short-term a close above 11,660 will revive the bounce around 12K. For that to play out a bullish gap on daily chart is needed.
Latest Market Insights
Q4 Outlook 2022: Winter is coming
- Winter is coming to the financial markets as central banks are tightening their grip. How spring will look is still a question.
European energy crisis: it will get worse before it gets betterThe winter in Europe will be tough, but whether the result is political chaos or sustainable, innovative solutions is still undecided.
A difficult and volatile quarter awaitsAs the year draws to an end, commodities continue to be at centre stage of the world with growth pockets political uncertainty.
The bright side: crises drive innovationThe positive spin on crises is that they come with solutions. It is worrisome that deglobalisation may be a response to this crisis.
Green transformation in China: renewable energy and beyondGoing green, China needs to span numerous energy sources to ensure stability, as every source comes with a challenge.
Asia: Intermittent solutions, but a faster renewable adoption curveAsian energy supply is being squeezed. This and the adoption of renewables may change the investment sentiment in the region.
FX: A Fed thaw needed to deliver a sustained USD turn lowerThe US Dollar can keep momentum when the Federal Reserve continues to tighten, leaving the rest to play to their drum.
Autumn can become ugly for equities and bond holders. Comfort for Dollar longsTechnical analysis suggests that equities could face a tough Q4 as could fixed income. US Dollar positions could provide some upside.
The next stock market sector to watch, with stocks going nuclearAs the world scrambles to find affordable, sustainable energy, nuclear is getting attention from politicians and investors alike.
The crypto space is getting cold when the hype disappearsCryptocurrencies face a winter of their own as retail investors and governments are asking tough questions.