Technical Update - S&P 500 and Nasdaq closing below key support confirming down trend. Lower support levels in play Technical Update - S&P 500 and Nasdaq closing below key support confirming down trend. Lower support levels in play Technical Update - S&P 500 and Nasdaq closing below key support confirming down trend. Lower support levels in play

Technical Update - S&P 500 and Nasdaq closing below key support confirming down trend. Lower support levels in play

Equity 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

We have entered the last quarter and the last earnings season of the year. October is historically very volatile for stocks during bear markets and this October could prove to be no different 

US Indices closed Friday below key support confirming down trend. Indices are back 2020 levels but indicators point to lower levels. 3,200 key level is in play for S&P 500 to 3,200. Nasdaq 100 is looking at 10K possibly 9K  

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.

 

Source: Saxo Group

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.

Source: Saxo Group
Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.