Indices Technical Forecast: Bullish
- Stocks look poised to continue to rally further in the week ahead
- S&P 500, Nasdaq 100, Dow Technical levels to watch in the week ahead
Recommended by Paul Robinson
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S&P 500, Nasdaq 100, Dow Jones Forecast Looking Bullish
The S&P 500 spent a good chunk of last week hemming and hawing, but given that the dollar was gaining ground and the bond market was tanking this was viewed as a good thing heading into the end of the week.
Bonds looked like the lone hold-out in the recent macro theme reversing, with the dollar having topped a few weeks ago and stocks having responded bullishly to a negative CPI print that was seen as sinking stocks even further. Now that bonds look to have or be very near a point of capitulation we may have the backdrop for sustained strength in stocks. Dollar off, everything else up.
The inverse head-and-shoulders pattern developing around the June low suggests on its own merit that stocks are poised to rally. A breakout above the neckline and over 3806 should provide room to run to the 3900/4000 zone, possibly higher (i.e. the 200-day MA currently over 4100).
Undercutting the low at 3647 wouldn’t turn the picture bearish but would be reason to turn cautious in favor of perhaps building a sturdier base before rallying. This outlook is generally viewed as corrective in nature in an ongoing bear market, so while things look on the up and up now the rally is seen as likely leading to another selling opportunity later.
S&P 500 Daily Chart
Nasdaq 100 Technical Forecast
The Nasdaq 100 is in the process of breaking out of the downward channel in place since the August top. A breakout here should get this leading index into gear, something the broader market needs. It is important that the market darlings lead the way if the leg up is to have, well, legs. Watch 11660 and then 12063 on the top-side, and the Friday low at 10962.
Nasdaq 100 Daily Chart
Nasdaq 100 Chart by TradingView
Dow Jones Technical Forecast
The Dow Jones has been the leader, but as noted above regarding the NDX, it will be important to see the Dow pass the baton to the tech-heavy market leader. The Dow is clearing levels that the other indices are stilling looking ahead to. If the S&P and Nasdaq get into gear then the 200-day MA at 32748, and falling, could come into play at some juncture in the weeks ahead. A breakdown below the Friday low at 30206 will warrant some caution.
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