Technical Update - Rebound in US equities struggling to gain momentum and seems to fizzle
Kim Cramer Larsson
Technical Analyst, Saxo Bank
S&P 500 broken short-term falling trend but resistance at 3,810 could be a struggle to break. Nasdaq 100 rejected at its falling trendline, testing support. A fresh look at Russell 2000 Small Cap Index that stands on solid ground, but will it hold for another test
S&P 500 closed yesterday above its short-term falling trendline trying to close above the GAP but failed. However, key resistance for S&P 500 is at around 3,810. S&P must close above that level to gain upside momentum and even if it does 3,907 will be a tough test.
IF S&P 500 slides back and closes below 3,678 followed by a close back below the upper falling trend line selling is likely to accelerate driving the Index to lows around 3,491 possibly lower.
An RSI close below its rising trendline would be a strong indication of this scenario to unfold.
If closing below yesterday’s low and support at around 11,035 October lows at 10,440 is likely to be taken out.
For Nasdaq 100 gain upside momentum a close of the Gap is needed. But even if that occurs there is strong resistance at around 11,660 and around 12,060. The declining 55 and 100 MSA’s will also provide resistance
The Russell 2000 Small Cap Index is having strong support at around 1,653. It is the upper level of the Consolidation area going back to 2020. There is RSI divergence on weekly time period suggesting a rebound. A rebound that has started and could take Russell 2000 resistance at around 1,900.
However, for the short-term for the rebound to maintain upside momentum it must close above 1,776. It has broken the falling trend line but 1,776 could prove to be too hard to break.
If Russell 2000 instead slides lower moving back below the falling trend line on daily time period and RSI closes below its lower falling trend line on both daily and weekly, the Small Cap Index could drop to around 1,500-1,467.
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.