S&P 500, Nasdaq, Dow Jones Technical Forecast For The Week A...| MENAFN.COM

Sunday, 02 October 2022 11:09 GMT

S&P 500, Nasdaq, Dow Jones Technical Forecast For The Week Ahead


(MENAFN- DailyFX) 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
Advertisement

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

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
  • 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

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

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
  • Crude Oil (WTI)
  • Canadian Dollar (USD/CAD)
  • US Dollar Index (DXY)
  • Euro (EUR/USD)
  • Gold (XAU/USD)
  • Silver (XAG/USD)
  • British Pound (GBP/USD)
  • Australian Dollar (AUD/USD)

-Written by Michael Boutros , Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

MENAFN12082022000076011015ID1104689977


Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.