Macro: Sandcastle economics
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Technical Update - Correction time for SP500 and Nasdaq. 2-3% downside likely
3 minutes to read
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: Everyone is talking about that the strong bullish move we have experienced the past 4 weeks as a Santa Clause rally. But a Santa Clause rally is a rally taking place starting a few days before Christmas and over the Holiday period
Currently Nasdaq 100 / USNAS100 correction is unfolding and could take the Index down 2-3% before buyers is likely taking back control pushing the Index higher
S&P500 / US500 still holding on but is likely to follow Nasdaq 100 into correction mode
Nasdaq 100 correction is ongoing testing the upper band of the gap area yesterday. If closing below 15,744 sellers are likely to try pushing the Index to close the gap i.e., a close below 15,535. If that scenario plays out the uptrend will be put on pause, possibly pushing the Index towards 15K
However, RSI is still showing positive sentiment and needs to close below 40 threshold to reverse that, and there is no divergence indicating Nasdaq 100 is likely to push to higher levels after a correction.
A close above 16,167 could see the Index chasing the all-time highs at around 16,765 from November 2021. That could be reached early in the new year
USNAS100 cfd correction is unfolding after the Index cfd failed to close higher an d instead formed a Doji candle 29th November (circled).
A correction down to the 0.382 retracement at 15,360 is in the cards, however, there is strong support at around 15,525.
RSI is still showing positive sentiment with no divergence indicating likely higher levels
A close above 16,166 will clear the road towards all-time highs at around 16,768 S&P 500/US500 cfd A minor correction could be seen before S&P is having another go at the 4,600 level and quite possibly taking out the July peak.
There is no divergence on RSI indicating the Index is likely to move higher. But again, a minor correction could be seen possibly down to around 4,500 maybe event testing the upper band of the gap area at 4,458 – see S&P 500 Index, not present on the US500 cfd chart.
If S&P 500 is closing the gap i.e., a close below 4,415 the uptrend is demolished.
A close above 4,607 will pave the way to all-time high level at around 4,818 Latest Market Insights
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