Indices Technical Forecast: Bullish

• Stocks look set up to rally as long as last week’s lows hold
• S&P 500, Nasdaq 100, Dow Technical levels to watch in the week ahead

S&P 500, Nasdaq 100, Dow Jones Forecast for the Week Ahead

The S&P 500 came off hard last week, with most of the losses on the back of the FOMC meeting. The down-move has certainly shook the tree on confidence that the recovery trade can continue. But again on Friday, similarly to what we saw with CPI at the lows, the market responded positively to “bad” news via the October jobs report coming in better than expected.

This suggests that while the market appears vulnerable it is shaking off news that has otherwise not been bullish for stocks from the standpoint of higher rates. At any rate, this show of buying again is indicative of a market that has the sentiment backdrop to rally.

The pullback from the recent high took back about half the gains off the lows, and in the week ahead if the market can keep pick up some momentum last week’s highs could quickly come into focus at just shy of 3912. Whether the market can cross that threshold is of course to be seen.

A drop below the Thursday low at 3698 will be reason for concern, and while not entirely bearish it will wipe away what appears to have been a turning point. Taking out last week’s low would at least require a reevaluation from the long side.

S&P 500 Daily Chart

S&P 500 Chart by TradingView

Nasdaq 100 Technical Forecast

The Nasdaq 100 is still trading quite heavy, and if there is a reason for concern it lies with this index. To get the broader market moving higher again in a meaningful way the NDX will need to start participating. And soon.

Last week’s low at 10632 will need to hold, which is also a test of the channel broken during mid-October. On the top-side, the 10972 level needs to get overcome once again. A breaking and holding of this level will be the first step in gaining some traction. 11176 is a minor form of resistance with the next major threshold not arriving until around 11660.

Nasdaq 100 Daily Chart

Nasdaq 100 Chart by TradingView

Dow Jones Technical Forecast

The Dow Jones continues to be the leader, but if this rally is to continue on and gain real traction then it will likely pass the baton off to the NDX. This doesn’t mean it won’t rally it just means it may start to slow down relatively speaking.

The trading around the 200-day has been volatile. The next big level to watch on the top-side is at 33071, which is close to the trend-line running lower off the highs. This could prove problematic and will need to be watched closely should we get up there this coming week. On the downside 31727 is last week’s low and viewed as an important threshold to hang onto.

Dow Jones Daily Chart

Dow Jones Chart by TradingView

Resources for Forex Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX