Macro: Sandcastle economics
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Technical Update - Main US Indices range bound waiting for direction
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
S&P 500 and Nasdaq range bound. Break out needed for direction
Dow Jones uptrend losing momentum facing correction
Russell 2000 in down trend. Closing in on key support
S&P 500 key support at 3,900 should still be observed. A close below is likely to fuel a sell-off down to support at around 3,700-3,650.
However, since there no divergence on RSI we could still see SP500 trying to break the medium-falling trendline and the key resistance at 4,110.
This week could prove to be decisive for the direction.
Nasdaq 100 is range bound between 12,060 and 11,450. Break out is needed for direction. A close below 11,450 is likely to send the Index to test October lows.
A close above 12,060 a test end possible break of the upper medium-term falling trend would be in the cards. Strong resistance at 12,740.
Dow Jones Industrial does not seem to be able to keep momentum after closing above 34,281 resistance. Massive divergence on R´SI draw a picture of a weakening trend that is likely to exhaust. If Dow closes below 33,239 sell-off down to around 0.382 retracement at 32,328 is likely.
If buyers come back in to the market an lift Dow to close back above 34,281 the uptrend is set to be extended to resistance at 35,492.
Russell 2000 is in a downtrend and likely to test key support at 1,758. A close below is likely to fuel another sell-off down to around October lows. For Russell 200 to resume bull trend a close above 1,900 is needed.
RSI divergence explained: When the price of an instrument is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
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