Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
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US Index Watch: SPX, NDX, DJIA - 13 Aug
Neil Wilson
Investor Content Strategist
Note: This is marketing material. This article is not investment advice, capital is at risk.
US Index Levels to Watch –6 August
Key trading levels and signals to watch in US indices
Summary:
US stocks have pushed higher once more, the latest positive catalyst July’s CPI report, which came in just below expectations. This was a signal to buy and the market is now certain that the Federal Reserve will cut in September. The S&P 500 and Nasdaq both hit fresh record highs, up 1.13% and 1.39% respectively, while the Dow added over 480 points. Tech and rate-sensitive sectors led the rally. Easing trade tensions, following a 90-day pause on higher tariffs for Chinese goods, underpinned the positive mood. Earnings season is coming to a close and has been largely positive, with earnings growth on the S&P 500 exceeding 10%.
S&P 500
Fresh push to all-time highs is clearing out the bears, who’ve pretty much given up – momentum is all, and the MACD is turning bullish after diverging from the price action since the middle of May – divergences are important but the max pain trade has been up for months . The bullish crossover on the MACD could catalyse push to 127% Fib extension of the Feb-Apr decline at 6,500. Bears require 6,300 then 6,200 but we could get a little more volatility as we head into the Jackson Hole meeting 21-23 August and the Labor Day return in September, followed by the Fed’s meeting. Expectations for a rate cut are so entrenched that anything other than a super-dovish Fed will upset the cart.
US Tech 100 NAS
Having taken out the 127% Fib extension of Feb-Apr around 23,780 the next step is the 24k round number. The 20-day SMA around 23,300 remains key and unless this is breached the bulls remain in control.
US 30 Wall Street
The Dow stalled out at 45k as it did last December and in January and we since seen some sideways price action but bulls are taking control again to follow SPX and NDX.We had a neat bounce off the 50-day SMA and until Tuesday the 20-day SMA was capping the upside but the breach of this line could call for a move up to the early July high at 44,880 and then the late July peak at 45,125.
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