Technical Analyst, Saxo Bank
Summary: S&P 500 struggling to gain upside momentum and could be range bound for some time. Nasdaq 100 having another go at resistance level. Is third time a charm? Strong rebound in Small Cap Russell 2000 Index
S&P 500 seems indecisive between 3,900 and 4,4040.
At the time of writing the Index is trading above the short-term upper falling trendline. If closing above and above 55 daily MA there could be further upside.
An RSI close above 60 will reverse the current negative sentiment and an Index close above 4,4040 will confirm an uptrend with potential to 4,200.
If S&P 500 slides back to close below the falling trendline it could be range bound for the next few days. Downtrend will resume with close below 3,900.
Nasdaq 100 has failed twice now to close above 12,881 but seems to be working on having another go after opening. The trend is up and if closing above it could give energy to a move to the 1.382 projection at 13,333 with room up to strong resistance at around 13,700 level.
There is minor divergence on RSI which indicates an exhaustion of the trend and if the Index slides back to close below 12,407 sellers could push Nasdaq down to around 12K.
Russell 2000 small cap formed a Bullish Engulfing pattern Friday and combined with RSI divergence a strong bounce to the 0.382 retracement at 1,814 could be seen. If Russell closes the gap created at the open today selling pressure is likely to resume and if Russell 2000 slides back to close below 1,695 bear trend will be extended with support at around 1,653.
The picture described in this analysis: Russell 2000 and S&P 500 are drawing patterns similar to 2007-2008 is still intact.
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.