Technical Analyst, Saxo Bank
At the open yesterday S&P 500 dipped just below 3,500. 3,500 is an important support level; it is the upper part of the consolidation/correction area from Q3-Q4 2020 and the 0.50 retracement of the 2020-Covid scare low to 2021 peak.
Buyers then took control throughout the session resulting in the Index to form a Bullish Engulfing candle for the day. Bullish Engulfing candle is a bottom and reversal candle which suggests S&P 500 is likely to bounce from here. Divergence on RSI and Volume bigger than normal there is support for the reversal scenario.
Key level to look out for is 3,678 i.e., the lower level of the GAP from last week and a close above the upper trendline in the falling channel.
If S&P 500 can close the gap i.e., a close above 3,727 there is upside potential to 0.618 retracement of September downtrend at 3,879. Resistance at 3,810.
If S&P 500 closes the week around current levels it is forming a Hammer candle on the weekly chart which indicates bottom and reversal. The Hammer candle is not the strongest signal however, and if S&P 500 closes below the 200 weekly SMA today Friday the Hammer candle has not materialized. However, there is divergence on RSI which supports the rebound scenario.
If S&P 500 fails to close the gap and the Index slides back below the low of yesterday 3,491, there is no strong support before around 3,200 which is the bottom of the consolidation area and the 0.618 retracement of the 2020-Covid scare low to 2021 peak.
First indication of that scenario to play would be if RSI closes below its rising trendline.
Even if we get a rebound to 3,900 the medium-term downtrend is not reversed. It would take a close above 4,120 to do just that.
Nasdaq 100 dipped below key support at 10,677 and the 0.618 retracement at 10,589. The Index is still below weekly 200 SMA but weekly RSI is showing divergence indicating a possible larger correction.
On daily chart Nasdaq closed just a few cents below the previous support at 11,037 and has formed a Bullish Engulfing candle similar to S&P 500.
Nasdaq is likely to continue its bounce to test the resistance at 11,272 i.e., the lower level of the GAP. If closing the gap resistance at 11,660.
If this rebound fizzles and Nasdaq takes out lows from yesterday at 10,440 the Index is set for 10K.
First indication of this scenario to play out would be if RSI closes below its rising trendline.
A new fragmented world order can render some of today's infrastructure obselete, but it also calls for massive new investments across the globe, which requires a new set of strategic and tactical investment strategies.
Steen Jakobsen,
Chief Investment Officer
As globalisation turns to fragmentation, China seems set on playing a role in the global economy, while simultaneously working towards proofing its own economic situation from external shocks and crises.
Redmond Wong,
Market Strategist
The recent bank runs and ensuing challenges are reminicent of something we've seen before. Will it end like the S&L crises of 1986 and 1995?
Chris Dembik,
Head of Macroeconomic Research
Equity markets need to recalibrate to another - fragmented - global world. What's your view on equities in this market - are they going up or down?
Peter Garnry,
Head of Equity Strategy
With every development comes new opportunites, some of which could be in India. Have you considered the country as a part of your diversification strategy?
Charu Chanana,
Market Strategist
A collar is an option strategy that allows some protection while maintaining some upside potential. What investment would you like to use a collar strategy for?
Hans Oudshoorn,
Trainer Academy
There are arguments to be made for many commodities to have upside. Which are you paying the most attention to this quarter?
Ole S. Hansen,
Head of Commodity Strategy
In a very challenging macro environment, which currencies do you think will come out on top?
John J. Hardy,
Head of FX Strategy