S&P 500 and Nasdaq outlook: a minor rebound?
The S&P 500 index is testing crucial resistance; the Nasdaq Composite Index is gearing up to test key resistance and what lies ahead and what are the key levels to watch?
S&P 500 technical outlook – neutral
It is still too early to conclude that the worst is over, but developments on shorter-term charts suggest US equities could be preparing for a minor rebound.
The S&P 500 index is testing key resistance at the early-October high of 3807, coinciding with the 89-period moving average on the 240-minute charts. This follows a failed attempt earlier this month to break below support at the September 30 low of 3584.
If history is any guide, a break above the resistance area could lead to a rebound in the interim (see chart) – failed attempts in recent months to break below key pivot levels followed by the breaks above the 89-period moving average led to a short-term rebound.
S&P 500 four-hour chart
Equities have been supported recently by a positive start to the US earnings season, oversold conditions, still-high level of pessimism and extremely light market positioning. If there any signs that the US Federal Reserve is softening its tone at next week’s Federal Open Market Committee (FOMC) meeting, it could be a solid catalyst for at least an interim turnaround in stocks.
A decisive break above resistance at 3807 could open way initially towards 3915 (the 50% retracement of the August-October fall), followed by the mid-September high of 4119. Strong resistance is at the August high of 4325 – the S&P 500 index would need to break this resistance for medium-term downward pressure to fade.
Nasdaq composite technical outlook – neutral
The Nasdaq Composite Index has risen above immediate resistance on the 89-hour moving average and is testing resistance on the 200-hour moving average ahead of crucial resistance at the early-October high of 11320. In the recent past, breaks above converged resistance areas including the 200-hour moving average, a price pivot, and the 89-hour moving average have been followed by a short-term rebound.
Nasdaq composite hourly chart
To be sure, developments occurring on intraday charts would probably have relevance for a few days. Resistance breaks on shorter-term charts need to be followed by breaks on higher timeframe charts for any rebound to be sustained and meaningful.
In this regard, the August high of 13181 is vital resistance – the Nasdaq Composite Index needs to clear this resistance for the medium-term downtrend to change. On the downside, the mid-October low of 10088 is fairly strong support.
This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets