US Stock Indices Technical Forecast: Weekly Trade Levels

  • SPX500 support ~4100, 3906, 3734- resistance 4352/68, 4545, 4677
  • Nasdaq support 12668, 12208, 11119- resistance 13165/225, 14261/576, 14861
  • Dow support at 29794, 28323, 27583/919- resistance 31392, 32272/375, 33271

Stocks have been on a tear with all three major US equity indices poised to close out a fourth consecutive weekly advance. While further upside potential remains, the rallies are now approaching key areas of technical resistance that will determine whether the recent gains are a simple bear-market recovery or the start of a larger trend reversal. The battle lines are drawn heading into the close of the week. These are the targets and invalidation levels that matter on the S&P 500 (SPX500), Nasdaq (NDX) and the Dow Jones Industrial Average (US30) weekly technical charts. Review my latest Strategy Webinar for an in-depth breakdown of these technical stock setups and much more.

S&P 500 Price Chart – SPX500 Weekly

S&P 500 Price Chart - SPX500 Weekly - SPX Trade Outlook - ES Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; SPX500 on Tradingview

Technical Outlook:In last month’s S&P500 Weekly Technical Outlook we noted that, “The immediate focus is on a breakout of the monthly range with the threat for a larger bear market recovery in the medium-term.” The SPX500 has now rallied more than 17% off the lows with the four-week advance attempting to breach resistance at the 2021 May high / low week close at 4179. Watch the weekly close here.

A more significant resistance zone is eyed just higher at 4352/68– a region defined by the 52-week moving average and the 61.8% Fibonacci retracement of the yearly range. Note that this threshold converges on yearly downtrend resistance and a breach / close above would be needed to validate a breakout / mark a larger trend reversal. Look for initial weekly support near the monthly opening-range lows around ~4100 with a break / close back below 3906 needed to mark resumption of the broader downtrend.

Bottom line: The S&P 500 range breakout is extending towards key technical resistance just higher- risk for price inflection / topside exhaustion ahead. From a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a stretch towards 4352/68 – look for larger reaction in price there for guidance IF reached. Review my latest S&P 500 Short-term Technical Outlook for a closer look at the near-term SPX500 technical trade levels.

S&P 500 Trader Sentiment – SPX500 Price Chart

S&P 500 Trader Sentiment - SPX500 Price Chart - SPX Retail Positioning - ES Technical Forecast

  • A summary of IG Client Sentiment shows traders are net-short the S&P 500- the ratio stands at -1.75 (36.31% of traders are long) – typically a bullishreading
  • Long positions are4.13% higher than yesterday and 1.11% lower from last week
  • Short positions are2.05% lower than yesterday and 3.58% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests US 500 prices may continue to rise. Yet, traders are less net-short than yesterday but more net-short from last week. From a sentiment standpoint, the combination of current positioning and recent changes gives us a further mixed US 500 trading bias.

Nasdaq 100 Price Chart – NDX Weekly

Nasdaq 100 Price Chart - NDX Weekly - NASDAQ Tradea Outlook - Stock Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; NDX on Tradingview

Notes: Nasdaq ripped through initial downtrend resistance three-weeks ago with an impressive 22.8% rally off the lows now probing confluent resistance at 13165/225– a region defined by the 1.618% extension of the June advance and the 38.2% retracement of the 2021 decline. Note that basic trendline resistance off the December highs also converges on this threshold and further highlights its technical significance – looking for a reaction up here.

A topside breach / close above would expose a larger advance towards the 52-week moving average a t 14261 backed by the March low-week close / 61.8% retracement at 14420/576 – both zones of interest for possible price inflection / topside exhaustion IF reached. Initial support rests with the 2021 low-week close at 12668 with a break / close below the 2021 low at 12208 needed to put the bears back in control.

Bottom line: Nasdaq is testing big resistance here and the focus is on the weekly close. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops – losses should be limited to 12208 IF price is heading higher on this stretch. Review my latest Nasdaq Short-term Technical Outlook for a closer look at the near-term NDX technical trade levels.

Dow Jones Industrial Average Price Chart – US30 Weekly

Dow Jones Industrial Average Price Chart - DJI Weekly - US30 Trade Outlook - Stock Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; US30 on Tradingview

Notes: The Dow Jones rallied more than 13.4% off the lows with the breakout now approaching critical technical resistance just higher at 33754-34164 – a region defined by the 1.618% extension of the June advance, the November lows, the April high-week close and the 61.8% retracement of the 2022 yearly range. Risk for possible price inflection / topside exhaustion there IF reached.

Initial weekly support now rests with the February lows at 32272 backed by 31392 (bullish invalidation). A topside breach / close above this key zone would fundamentally shift the technical picture with such a scenario exposing the April highs at 35492 backed by the yearly high-day close at 36231.

Bottom Line: The Dow is approaching a major technical resistance confluence – risk for price inflection / topside exhaustion. From a trading standpoint, a look for reduce long-exposure / raise protective stops on stretch towards 33754-34164 IF reached – losses should be limited to 31392 to keep the upside bias viable in the weeks ahead. I’ll publish an updated Dow Jones Short-term Technical Outlook once we get further clarity on the near-term NDX technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Active Weekly Technical Setups

-Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex





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