Macro: Sandcastle economics
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Technical Update - S&P500 and Nasdaq100
Kim Cramer Larsson
Technical Analyst, Saxo Bank Group
S&P500 is testing the 200 Daily SMA and resistance at 4,475. For the leading US Index to fuel further upside a break above 4,490 is needed. If that plays out a move to resistance at around 4,600 is not unlikely. 55 SMA has crossed below 200 SMA and with the RSI (Strength Indicator) struggling to move above 60 (at the time of writing). If RSI cannot close above 60 Bears could get a comeback in the market. However, RSI is still showing Divergence which has not been traded out (can only be done by closing above 60 or dropping below previous RSI lows i.e. January trough)
A daily Index close below 4,400 could accelerate a sell-off to test lows around key support at 4,164
On the weekly time period S&P500 formed a Bullish Engulfing candle Friday which is a bottom and reversal candle and should support a rebound/further upside picture. However, the RSI is still below 60 i.e. still in bearish sentiment since it was last below 40. To add to that, RSI is below its falling trendline. If RSI fails to close above the rebound could be running out of steam. Medium trend is still down.
Friday, Nasdaq 100 closed above the resistance at 14,342 but to build on that and move higher from there RSI must close the day above 60. 55 Daily SMA is putting a lid on the upside indicating market to retrace from current levels.
The Index could be rangebound between 13K and 14,500 for the foreseeable future.
On the weekly time period Nasdaq 100 formed a Bullish Engulfing pattern. However, if the Index cannot follow through and RSI drops back below 40 this bottom and reversal pattern could be cancelled.
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