Technical Analyst, Saxo Bank
Summary: Semiconductor Sector (iShares ETF) closed above 390 leading S&P 500 and Nasdaq to close above medium-term falling trendline. Indicators point to higher levels and key resistance levels are likely to be tested shortly
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Today's Market Quick Take from the Saxo Strategy Team
S&P 500 closed yesterday above 200 daily SMA and above 4.000, and more importantly above its medium-term falling trendline touching 0.786 retracement of the December sell-off.
RSI is above 60 threshold indicating higher levels in the coming days which could result in the key resistance at 4,110 to be tested.
A daily close above 4,110 will confirm the medium-term down trend has reversed. Short-term there will be room up to around 4,308 resistance and 1.618 projection of the December correction.
For S&P 500 to reverse this bullish picture a clos below 3,764 is needed.
Nasdaq 100 closed yesterday above its medium-term falling trendline and a few points above the 0.786 retracement of the December sell-off. But still below its 200 daily SMA which is declining.
However, RSI is showing positive sentiment strongly indicating key resistance at 12,167 is likely to be tested and broken.
IF Nasdaq 100 closers above 12,167 a swift move to 1.382 projection and resistance at 12.740 is likely.
For Nasdaq 100 to resume downtrend a close below 11,251 is needed. If that plays out October low is likely to bested.
Russell 2000 seems set to break the key resistance at 1,906. A close above will pave the way for the small-cap Index to the 1.618 projection and resistance around 2,020.
To reverse this bullish picture a close 1,825.
Semiconductors where driving this move. Here illustrated by the iShares Semiconductors ETF that closed above 390.59 after a couple of failed tries. Next resistance is at around 423 which positive RSI above 60 threshold strongly indicates will be tested.
However, if Semiconductors ETF slides back to close below 372.60 the sector could be range bound between 336 and 400 for quite some time. The shorter- and medium-term Moving Averages are rising whereas the longer-term 200 SMA is still declining which is likely to put a dampener on the upside potential.
The Semiconductors ETF needs to close below 336 to draw a bearish picture.
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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.
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