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S&P 500 & Nasdaq 100 Indices – Current Analysis

Both the S&P 500 and Nasdaq 100 indices have shown a recovery from crucial support levels recently. Nevertheless, the potential for further upside may be constrained at the moment. Let’s explore the outlook and the significant levels to monitor within the S&P 500 and Nasdaq 100 indexes.

&P 500 and Nasdaq 100 – Recent Developments in US Indices

Recent days have witnessed a rebound in US indices, attributed to positive earnings reports and a decline in US yields. However, the substantial decline observed since the previous month has left a mark on the broader uptrend.

The S&P 500 index has experienced a decline of 6% from its peak in July. The Nasdaq 100 index has dropped by 8%. These are the most significant declines since the rally commenced in March. This risk was highlighted in recent updates, such as “US Indices Rally Beginning to Crack? S&P 500, Nasdaq Price Setups,” released on August 3, and “S&P 500, Nasdaq 100 Forecast: Overly Optimistic Sentiment Poses a Minor Setback Risk,” published on July 23.

Factors such as overbought conditions, excessive optimism, and the perception of a soft landing for the US economy have contributed positively. Nevertheless, rising real yields and valuations considerably exceed historical averages. EPS projections for the full year that have not yet experienced substantial growth collectively elevate the expectations for equities to outperform alternative asset classes. Consequently, the recent rebound might not follow the typical pattern. The potential for further upside could be constrained for the time being.

Nasdaq 100 Index Technical Analysis

It appears that the descent has temporarily halted around critical support levels. These include the 89-day moving average, the lower boundary of the Ichimoku cloud on the daily chart, and the June low of 14700. An important observation is the index’s drop below the 89-period moving average and the lower edge of the Ichimoku cloud on the 240-minute charts. This is the first instance of such an occurrence since the rally’s initiation earlier this year, indicating a potential easing of the broader bullish pressure.

Additionally, the monthly charts, compared to the 50% surge since October (refer to the monthly chart), have displayed vulnerability, suggesting the emergence of a gradual weakening pattern, similar to gold’s recent performance. To see a revival of strength, the index would need to surpass resistance at 15400. More robust resistance awaits at the July high of 15900.

S&P 500 Index Technical Analysis

The recent retreat followed the inability to breach converged resistance at the upper edge of an ascending pitchfork channel, originating from the end of 2022, along with the April 2022 high of 4637. Presently, the index has found support at the June low of 4325, just below the lower edge of an ascending pitchfork since early 2023. To mitigate downside risks, the broader index might need to overcome the resistance-now-turned-support at 4550.

In summary, both the S&P 500 and Nasdaq 100 indices have witnessed recent recoveries from crucial support levels, but the potential for extended gains seems limited at present. Technical indicators suggest caution, with significant resistance levels to overcome in order to sustain a more positive trajectory. Stay Updated with the Market News

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