Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: The US equity market rebounded strongly from its sell-off in December and most indices have returned to where they were before the fall. A technical analysis of the charts has a lot to say about where things may go from here.
Regardless of this, the lower rising trendline is very clear it is likely to be broken to the downside today. This fits nicely in line with my post about the Nasdaq 100 last week where I predicted markets would top out Friday or Monday .
A bearish breakout should take the Index down to around 2,635 which is both the 0.382 retracement and the January correction. Some support at around 2,700.
The last time we saw MACD at its current levels was just after the all-time high in October.There are minor divergences on RSI and volume has been falling slightly during the entire January/February rally.
Equities are ripe for a correction. However, a close above 2,816 will most likely extend the uptrend.
An almost identical picture: as mentioned last week as a possible scenario, the Nasdaq 100 broke its lower rising trendline almost sideways, trying to get back above. However, it looks like it failed at the closing and ended yesterday just on the resistance at 7,107.
Resistance at 7,206 is the important level the Index has to break to continue its momentum. Volume has been falling more or less throughout February, which is a sign of weakness in the uptrend.
A bearish correction could take the Nasdaq down to around 6,600.
RSI haven’t broken above the 60 threshold, meaning it's still in bearish sentiment. Volume was rising during the December sell-off and has been flat at best during the rebound here in 2019.
If we do not see a pick up in volume (last week weekly volume was the lowest since summer 2018!) and RSI stays below 60 and even starts to drop lower, the bearish trend could resume.