Macro: Sandcastle economics
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Technical Update - S&P 500 testing key resistance. Nasdaq struggling to keep up. Dow Jones in strong uptrend
Kim Cramer Larsson
Technical Analyst, Saxo Bank
S&P 500 closed Friday just a few points below key resistance at 3,907. RSI closed also below its threshold at 60 i.e., still showing negative sentiment.
S&P is trading lower in early session Monday and the Index over the next couple of days closes below 3,800 bear trend is likely to resume. If RSI is failing to close above 60 and instead gets rejected it will confirm that scenario.
If S&P500 instead manages to climb higher and close above 3,907 the Index could get momentum towards the medium-term falling trendline (Black line) with strong resistance at around 4,119.
Nasdaq 100 has dropped back after testing key resistance and the 0.382 retracement around 11,660.
If the Nasdaq Index drops lower to close below 11,176 the bear trend has resumed for likely new lows.
RSI didn’t even test the 60 threshold and if breaking back below 40 and its lower rising trendline it will support the bearish picture.
Dow Jones Industrial Av. Index has outperformed the other two the past couple of weeks experiencing a strong rally off lows.
Closing above 200 daily SMA Friday Dow Jones could test the resistance at around 33,292 and the medium-term falling trendline.
RSI is above 60 with no divergence supporting the short-term uptrend and the likelihood of higher levels.
Medium-term trend is still however, and Dow Jones needs to close above 34,282 to reverse that. If weekly RSI closes above 60 there is great likelihood that scenario will play out. RS is currently below 60 and showing negative sentiment.
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