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Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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Technical Update - SP500 and Nasdaq taking out key supports. Sell in May is here early, will it continue?
Kim Cramer Larsson
Technical Analyst, Saxo Bank
"Sell in May" seems to have arrived early this year.
The S&P 500/US500 and Nasdaq 100/USNAS have been hit with heavy selling over the past week, taking out several support levels. Indicators are pointing to lower levels going into next week, but a minor correction could come soon. However, there is a long way to go before a bullish trend returns.
The S&P 500/US500 and Nasdaq 100/USNAS have been hit with heavy selling over the past week, taking out several support levels. Indicators are pointing to lower levels going into next week, but a minor correction could come soon. However, there is a long way to go before a bullish trend returns.
S&P 500 closed Thursday just above the support at around 5,000. However, overnight the Future/US500 CFD has been trading lower, dipping down to the 100 daily Moving Average and the lower part of the Cloud — see the US500 chart — but has recovered somewhat, trading just below 5,000.
The daily RSI is showing negative sentiment, suggesting the S&P 500/US500 are likely to trade lower in the coming days and weeks.
A daily close for the S&P 500 (cash index) below 4,953 could add to selling pressure down to around 4,845 support, close to the 0.382 retracement of the entire uptrend since October 2023.
For the S&P 500 to demolish this bearish trend, a close above 5,416 is the minimum requirement. To reverse it, a close above 5,212 is required to establish a bullish trend
US500 cfd levels: Support at 4,919 and 4,841-4,793
Nasdaq 100 closed yesterday below support at around 17,478, just above the 100 DMA and above the lower boundary of the Ichimoku Cloud - shaded area that should be regarded as a support.
Overnight, the Future/USNAS100 CFD spiked below support at 17,159, almost touching 17,000, and also spiked below the Cloud but is, at the time of writing, trading a few cents back above.
If the Nasdaq 100 closes below the Cloud, we are likely to see further downside. Nasdaq 100 (cash index) support is at 17,128-16,963.
The RSI is showing negative sentiment, supporting the bearish outlook short-term.
To negate this, a daily close above 18,000 is required
USNAS100 cfd levels: Support at 16,930. Resistance at 17,780
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