S&P 500, Nasdaq and Dow Price Technical Outlook: Weekly Trading Levels
- S&P500Nasdaq & Dow Trade Level Technical Update – Weekly Charts
- SPX500 meets key support at 3812 – resistance 4139/96, 4323
- Nasdaq bounces off key support at 11520/768 – resistance 12668, 13506
- Dow reversal off key support at 30812 – resistance 32944
Stocks ended a seven-week losing streak, with all three major stock indices rebounding strongly off key technical support. The rallies shift the short-term focus to a broader recovery within the broader downtrend and we are on the lookout for a spike in exhaustion in the weeks ahead. These are targets and invalidation levels that count on the weekly technical price charts of the S&P 500 (SPX500), Nasdaq (NDX) and Dow Jones Industrial Average (US30) before the end of the month. Exam my last Strategy Webinar for an in-depth analysis of these technical stock setups and lots of more.
S&P 500 – SPX500 Weekly Price Chart
Chart prepared by Michel Boutrostechnical strategist; SPX500 on Tradingview
Technical outlook:In my last S&P500 Weekly Technical Outlook we noted that SPX500 had, “is about to score a seventh straight weekly decline with price now defying the confluent downtrend Support– risk of a bear market bounce here. The index rebounded after 38.2% Fibonacci retracement of the 2019 rally at 3812 (the low recorded at 3810) at last week’s close with the ensuing rebound now up more than 6.7% from the lows.
The threat remains for a new recovery here with an initial week rresistance eyed the June low / 38.2% retracement of the yearly decline at 4139/96 supported by the 61.8% retracement of the March selloff at 4323 – the two levels of interest for a possible surface depletion IF reached. Wider bearish invalidation now pegged at the 52-week moving average / 61.8% retracement of the yearly range at 4428/34 – A break/close above would be needed to suggest that a more meaningful low was recorded last week. First week ssupport now rests with the low week closing at 3906 supported by 3812 and the 2021 annual opening at 3434 – look for a bigger price reaction there IF reached.
At the end of the line : A rebound from downtrend support keeps the focus on this short-term rally. From a trading perspective, look for a reduction in long exposure/increase protective stops on a stretch towards the 4139-96 pivot area – rallies should be capped at 4323 IF price continues lower on this stretch. Review my latest S&P500 Short term Technicall Prospects for a closer look at the near-term SPX500 technical trading levels.
S&P 500 – SPX500 Weekly Price Chart
- A summary of IG Customer Sentiment shows traders are net long on the S&P 500 – the ratio is +1.87 (65.11% of traders are long) – typically a bearishreading
- Long positions are2.69% less than yesterday and 8.12% less than last week
- Short positions are 5.81% more than yesterday and 13.52% more than last week
- We generally take a contrarian view of crowd sentiment, and the fact that traders are net long suggests that US 500 prices may continue to decline. Still, traders are net less long than yesterday and compared to last week. Recent changes in feeling warn that the current US 500 price trend may soon reverse higher despite traders staying sharp.
Nasdaq 100 Price Chart – Weekly NDX
Chart prepared by Michel Boutrostechnical strategist; NDX on Tradingview
Remarks:Last week we noted that “the seven-week decline drags the Nasdaq into a key technical confluence at 11520/768– a region defined by the 100% extension of the yearly decline and the 50% retracement of the 2020 advance. Looking for a possible price inflection here with a weekly break/close below is necessary to maintain the viable immediate decline towards the 61.8% retracement at 10589.” The index bottomed out at 11492 before rebounding with the focus now on this bear market rally.
Stable initial resistance at the close of the 2021 week low (12668) supported by the 38.2% retracement of the end-2021 decline at 13506 and the key 61.8% retracement of the March decline at 13824– the two areas of interest for a possible SI surface depletion reached.
At the end of the line : A bounce off the Nasdaq downtrend support risks a rally towards downtrend resistance. From a business perspective, look to reduce long exposure / increase protective stops on a stretch to the upper parallels.
Dow Jones Industrial Average Price Chart – US30 Weekly
Chart prepared by Michel Boutrostechnical strategist; US30 on Tradingview
Remarks: The Last week’s focus was to be “looking for a reaction to a drop in downtrend support at 30812 to guide you here. The index briefly recorded an intraweek low at 30635 before rebounding sharply with the rally now up more than 6.7% from lows. Initial weekly resistance seen at the close of the March week low at 32944 supported by 33637-34006– an area of interest for a possible surface depletion SI reached. Wider bearish invalidation now lowered to 34539.
Conclusion : A the rebound from confluent support at the 100% extension keeps the focus on this short-term recovery. From a trading standpoint, look to reduce long exposure / increase protective stops on a stretch to the upper parallels – look for a reaction there to guide you. A breakout of the lows would threaten a test of the 2021 lows / 38.2% retracement around ~29794.
For a full analysis of Michael’s trading strategy, check out his Fundamentals of Technical Analysis Series on Bbuild a Jrading Sstrategy
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-Written by Michel BoutrosTechnical Strategist at DailyFX
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