Technical Analyst, Saxo Bank Group
Summary: S&P 500 and Nasdaq 100 have formed top and reversal patterns. Downtrend not yet confirmed with supports still holding on.
Russell 2000 small cap Index in confirmed downtrend.
VIX Index bouncing from strong support.
Prepare for a volatile May.
S&P 500 has formed a top and reversal pattern in the form of an Evening Doji star like pattern (circled).
Ideally the body of the Doji should not be covered by either of the candles on both sides but with the Doji being a Gravestone Doji combined with the divergence on RSI it is a strong top and reversal signal.
For this top and reversal pattern to be cancelled and for S&P 500 to resume uptrend a close above the height of the Doji is needed i.e., above 4,187.
S&P 500 is close to test the lower short-term rising trendline and a break below support at around 4,050 is to be tested and likely to be broken.
Strong support at around 4K where 100 daily Moving Average will add to it.
US500 cfd. Top and reversal indication. Support at 4,050. A break below there is support at 4K. For US500 to resume uptrend a close above 4,188 is neded.
Nasdaq 100 has formed a top and reversal pattern almost similar to the one on S&P 500.
RSI divergence suggests uptrend is weakening and could reverse.
If Nasdaq 1000 drops below 12,724 the lower rising trendline and support at around 12,563 is likely to be tested.
Nasdaq will most likely also find some support at the cloud currently rising. However, a close below 12,563 could fuel a sell-off down to around 11,830
To demolish the top and reversal pattern and resume uptrend, a close above 13,288 is needed. If that scenario plays out a move to around 13,700 resistance area is in the cards.
Russell 2000 small cap index is in a downtrend after lower close yesterday. The Index has set its eyes on support at around 1,650. Some support at around 1,722.
There is strong overhead resistance with 21, 55 and 100 daily Moving Averages declining. 55 Moving Average has crossed below the 100 Moving Average thus drawing a Death Cross.
VIX index (future) has bounced from support at around 16.55. If the Index future breaks above 21.20 the falling trendline in the Descending triangle like pattern could be tested. (Weekly chart)
A break above the the trendline there could be upside potential to 33 – 36.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
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