Technical Analyst, Saxo Bank
S&P 500: After several attempts last week S&P500 closed below June low at 3,636 Friday i.e., a daily, weekly AND monthly close below a key support level is a strong bearish signal.
The Index closed bang on the 200 weekly SMA providing some support. Volume has been high during the past three weeks of selling pressure and weekly RSI is back below 40 adding to the bearish picture.
Next key support is at 3,500 which is the highest level of the consolidation area from 2020 which is not the strongest support. S&P500 is likely to sell-off further down to bottom level of the consolidation area at around 3,200. That is also the 0.618 retracement of the 2020 trough to 2021 peak.
S&P500 is looking at a potential ugly October month. Second and third week of October should especially be observed.
Short-term we could see bottom fishers trying scoop up beaten down shares possible managing lifting the Index back above 3,636. However, that is likely to be a short-lived minor correction.
Nasdaq 100 closed Friday below June low at 11,037. That means it has closed below support from the consolidation area back from Q4 2020 closing in on key support at around 10,677 i.e., the lowest level of the consolidation and the 0.618 retracement of the 2020 trough to 2021 peak.
A close below key support at 10,677 is likely to fuel a sell-off down to 9K with some support at 10K. 10K is the 1.382 projection of the Q3 correction and 9K is around the 1.618 projection of the correction and 0.786 retracement of the 2020 trough to 2021 peak.
Both the rising volume the past three weeks and RSI below 40 support the bearish outlook.
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.
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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.
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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.