Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
Technical Analyst, Saxo Bank Group
Under heavy volume the sell-off in S&P 500 resulted in the Index closing below the 0.382 retracement confirming down trend (lower lows and lower highs). RSI is still above 40 i.e., positive sentiment but likely further selling pressure is to push it below in negative territory.
Support at 3,981. Stronger support at around the 0.618 retracement and 3,910.
To reverse the trend a close above 4,203 is needed.
Looking at the bigger picture on the weekly chart, rebound in S&P 500 has exhausted just below the 55 weekly SMA and below the 0.618 retracement level at 4,367. That doesn’t bode well for the coming weeks or months as the down trend seems to resume. If S&P 500 closes below 3,900 it is likely to test the June lows going into September at 3,636. A close below June lows, S&P500 is likely to be hit by heavy selling down to strong support around 3,200 i.e., around the 0.618 retracement and the low level of the consolidation area back in 2020 prior to market moving above pre-covid scare levels.
To reverse the medium term down trend a weekly close above 4,326 is a must.
Nasdaq 100 closed below 0.382 retracement Friday under heavy traded volume. The Index is set for a lower opening today with the Nasdaq 100 future trading 0.75% lower.
55 SMA and support at 12,379 is likely to be tested shortly. Key support at around 12,047 where a correction in this confirmed down trend is likely to be seen.
RSI still above 40 but if we see another negative end to the trading session today the threshold is likely to be broken. If Nasdaq 100 closes below 12,037 June lows are likely to be tested. Around the June low is a strong support level going back to the consolidation area in Q3 2020
Weekly chart shows that Nasdaq 100 exhausted at the 0.618 retracement of the Q2 sell-off and just below the 0.50 retracement of the H1 2022 bear move.
RSI is still above 40, however, but in negative sentiment since it has failed to close above 60 after closing below 40 back in April.
If RSI closes below its lower rising trendline we are likely to see much lower price levels on Nasdaq 100.
The consolidation area around 11K will be key for rest of 2022 market.
The Volatility Index VIX has dipped below 20 before bouncing. However, the value is still in the mid- 20’s i.e., not so fearful. At least not yet. If VIX moves above 30 the resistance at around 37 is likely to be tested. A close above could fuel further upside potential which means we are in fearful territory.
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)