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 - 30 July
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 – 30 July
Key trading levels and signals to watch in US indices
Summary:
US stocks closed lower Tuesday, with the S&P 500 failing to close at a record high for the first time in seven sessions. The broad index fell −0.3%, the Nasdaq −0.2%, and Dow −0.46%. Earnings disappointments from UnitedHealth (−7.5%), Boeing (−4.4%), Merck (−1.7%), UPS (−10.6%), and Whirlpool (−13.4%) weighed on sentiment. Job openings fell in June, while consumer confidence beat expectations. US-China trade talks ended without a deal, but hopes remain for extending the tariff truce before the 12 August deadline. Futures are flat ahead of today’s Fed decision, where rates are expected to stay unchanged. Investors await earnings from Microsoft, Meta, Ford, and others.
We enter a make-or-break period for the market – whilst many are rushing to upgrade year-end targets for the S&P 500, the next few days will be vital. The Federal Reserve is unlikely to cut today but most believe easing is coming sooner or later. What drives the timing of these cuts will be inflation data, with the PCE report due tomorrow, and the jobs market, with the nonfarm payrolls on Friday.
The S&P 500 has had its longest run trading above its 20-day moving average since 1964...volatility has been crushed. Records are meant to be broken but this is unlikely to persist.
Although concentration in megacap tech remains pronounced, therally has been quite broad. Six of the 11 sectors in the S&P 500 are higher than the last market top in February.
S&P 500
Valuations are at historic highs, volatility at historic lows – surely something has to give? The Case-Shiller PE ratio sits at 38.86; the only time it’s been higher was during the dotcom bubble.
The broad market made its move out of the narrowing wedge and it was up with the meltup phase producing six straight all-time closing highs before yesterday’s pullback. Bulls are still in control and the long-term trend off the Jan 2022 and Dec 2024 peaks could see 6,475 or even 6,500, the 127% Fibonacci extension of the Feb-Apr decline, before bears can retake control.
On the shorter-time frame chart we can see the 23.6% retracement of the 16 July lows at 6,370 offering support. Looking at near-term momentum fade towards the 38.2% level at 6,337 as the 50-period SMA down through the 200-period SMA. On a 4hr chart the Channel Up has broken through the support line yesterday, looking for possible move back to the 6,300 level.
US Tech 100 NAS
The 127% Fib extension of Feb-Apr drop takes bulls to 23,781. Bears look to trend support at 23,250 in the near term.
US 30 Wall Street
Rising wedge broken through support line and possible bearish break towards 43,660 area with the 16 July low at 43,747. Ahead of this is the 22 July low at 44,212.
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