U.S. Indices Technical Outlook:

• S&P 500 looks like it could head higher, but conviction isn’t super high
• Rally likely to fail in the not-too-distant future
• S&P 500, Nasdaq 100, Dow Jones technical outlook

S&P 500, Dow Jones, Nasdaq 100 Technical Outlook for the Days Ahead

Stocks are in bounce mode following the strong positive reaction to a worse-than-expected CPI number on Thursday. The S&P 500 appears to be in a corrective bounce and could continue to rally over the coming week or so.

The thinking is that we may see a bit of an a-b-c type rally, where you get a thrust off the low followed by a pullback and then another thrust higher. The ride higher could be a bumpy one underscoring the generally weak nature of the market.

Ahead lies a pivot from earlier in the month at 3806 which is in confluence with an unproven trend-line off the summer high. This is the first area to look for resistance, but a recovery could continue beyond that if the NDX, which we will soon look at, can get outside of its downward channel.

From a tactical standpoint this is a bit of a tough spot. Establishing bullish bets look to be best done on pullbacks, with chasing price higher at risk of getting cut short with weakness. Shorts don’t look ready to gain the upper hand just yet. This wish-washy outlook leaves me in limbo at the moment, and hanging out on the sidelines may prove most prudent until the picture clears up a bit.

S&P 500 Daily Chart

S&P 500 Chart by TradingView

The Nasdaq 100 is at the top of the downward channel in place since the summer rally high. If the market is to keep on moving higher this will need to be overcome. It is important that the NDX starts leading the market higher if we are to see the bear market rally gain any traction, otherwise we could see stocks turn down sooner rather than later.

Nasdaq 100 Daily Chart

Nasdaq 100 Chart by TradingView

The Dow Jones has been the strongest of the bunch with it having already made a higher high from the early October swing-high. The next level up is 31048 as resistance. It isn’t a great sign to see this index lead, so again to reiterate it will be important for the NDX to take the baton from the DJI if more upside is to be seen across the board.

Dow Jones Daily Chart

Dow Jones Chart by TradingView

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—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX