S&P 500, SPX, NASDAQ 100, NDX – Value Motion:
- US indices regular after widely-expected Fed fee hike.
- Earnings, China stimulus, and resilient world progress are supportive.
- Excessive optimism, overbought circumstances, overcrowded positioning, and seasonality are potential headwinds.
- What’s the outlook for the Dow, the S&P 500 index, and the Nasdaq 100 index?
US fairness indices have been largely flat, hovering round year-to-date highs after the US Federal Reserve hiked rates of interest by the extensively anticipated quarter share level.
Whereas the post-meeting assertion stored the bias for “extra coverage firming”, on the press convention, Fed Chair Powell appeared to have leaned towards the dovish aspect. “I might say it’s definitely potential that we’ll increase funds once more on the September assembly if the info warranted,” stated Powell. “And I might additionally say it’s potential that we’d select to carry regular and we’re going to be making cautious assessments, as I stated, assembly by assembly.” The information-dependent/ affected person strategy going into the subsequent assembly has boosted the market’s notion that US rates of interest are peaking, supporting danger urge for food on the margin.
With the earnings season off to a very good begin, world progress being resilient, and extra China stimulus remaining a risk, markets have causes to cheer. Having stated that, excessive optimism, overbought circumstances, overcrowded positioning, and seasonality headwinds are potential dangers. For extra dialogue on this, see “S&P 500, Nasdaq 100 Forecast: Overly Optimistic Sentiment Poses a Minor Setback Danger,” revealed July 23.
Dow Jones Industrial Common Weekly Chart
Chart Created Utilizing TradingView
Dow Jones Industrial Common: Scope for additional positive aspects
The Dow Jones Industrial Common’s current break above a horizontal trendline from August at about 34280 has triggered a reverse head & shoulders sample, first highlighted in “Dow, S&P 500, Nasdaq Technical Outlook: No Signal of a Reversal,” revealed July 9. The left shoulder is on the December low, the pinnacle is on the March low, and the fitting shoulder is on the Could low. The bullish break has opened the way in which towards the 2022 excessive of round 37000.
NASDAQ 100 Month-to-month Chart
Chart Created Utilizing TradingView
Nasdaq 100: Overbought, however no signal of reversal
The Nasdaq 100 index is wanting fairly overbought, whereas variety continues to stay low. For extra on variety, see “S&P 500, Nasdaq 100 Forecast: Overly Optimistic Sentiment Poses a Minor Setback Danger,” revealed July 23. Moreover, the momentum on greater timeframe charts has didn’t mirror the power on shorter timeframe charts. For example, on the month-to-month chart, the index is near its 2021 peak, however the Shifting Common Convergence Divergence indicator has hardly picked up.
To make certain, this doesn’t essentially imply the index is bearish, not no less than till there’s a value affirmation. It most likely means, from a danger: reward perspective, it might be prudent to show cautious. Speedy assist is on the mid-June excessive of 15285, across the 30-day transferring common. Subsequent assist is on the end-June low of 14690 – a break under this assist could be wanted for the quick bullish strain to ease.
S&P 500 Weekly Chart
Chart Created Utilizing TradingView
S&P 500: Uptrend intact because it nears a key hurdle
From a development perspective, just like the Nasdaq 100 index, there isn’t a signal of a reversal of the uptrend on the S&P 500 index charts. Having stated that, tentative indicators of fatigue are rising because the S&P 500 index nears the April 2022 excessive of 4637, barely under the 2022 file excessive of 4819.
Nonetheless, until the index breaks under quick assist on the mid-June excessive of 4450, the trail of least resistance stays sideways to up within the close to time period – a degree confirmed by still-solid momentum on the weekly charts. Solely a break under 4450 would point out that the bullish strain had briefly pale. For the broader bullish outlook to reverse, the index would wish to fall under the 89-day transferring common (now at about 4250).
— Written by Manish Jaradi, Strategist for DailyFX.com
— Contact and observe Jaradi on Twitter: @JaradiManish
DailyFX gives foreign exchange information and technical evaluation on the tendencies that affect the worldwide foreign money markets.
