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Technical Update - S&P 500 & Nasdaq facing correction. Russell 2000 resuming bear trend
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: S&P 500 broken bearish out of rising channel. Could drop to 4,030-4,000 before finding support
Nasdaq 100 broken bearish out of sideways range with short-term down side potential to 12,517.
Russell 2000 resuming bear trend drawing similar bearish pattern to 20007-2008.
Analysis including US500 and USNAS100 cfds
S&P 500 broke bearish out of its rising channel and is likely to drop to 0.382 retracement and support at around 4,030 with in next couple of days. The Index could dip to test the upper part of the Cloud and 4K.
RSI is still showing positive sentiment and there is no divergence which indicates S&P 500 could bounce back and move higher.
Sell in May and Go away might be a little premature to suggest.
However, for S&P 500 to resume uptrend a close above 4,143 is needed for a move to test resistance at around 4,195.
US500 cfd testing support area 4,085-4,071. If closing below a sell-off down to around 4K should be expected.
If US500 rebounds back above 21 daily Moving Average resistance at 4,195 is likely to be tested. RSI is still positive with no divergence indicating a move higher could be seen.
Nasdaq 100 broke bearish out of its range bound trading with a bang. The sideways trend Nasdaq has been trading in for the past couple of weeks has formed a Double top pattern with potential down to support at around 12,157 as illustrated by the two arrows.
The lower rising trendline and the 55 daily Moving Average will offer some support.
If RSI manages to stay above 40 threshold we could see a rebound after this correction. If Nasdaq 100 close above 13,044 the Index is likely to trade higher above March peak at 13,204.
If Nasdaq 100 closes below 12,517 there is downside potential short-term to around 12K where the 100 and 200 daily Moving Averages will offer some support.
USNAS100 : Closed just below Support at 12,837. Next support at around 12,545. If USNAS100 can manage to move back above 21 daily Moving Average upper range at 13,188 could be tested.
Russell 2000 Index is still drawing almost similar pattern as it did back in 2007-2008 as outlined in previous Technical Update :
Technical analysis Russell2000 SP500 drawing patterns similar to 2008
If Russell 200 breaks below 1,695 there is support at 1,641 but no strong support until around 1,458.
Russell 2000 weekly charts 20007 vs. 2023
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