Quarterly Technical Outlook - S&P 500, Nasdaq 100, DAX, FTSE 100, FTSE 250 and Hang Seng Index

On the monthly chart there has been massive divergence on RSI since 2020. That divergence needs to be traded out either by a new higher high on the Index or by RSI closing a month below 40.

December month formed a Bearish Engulfing candle i.e., December opened higher than November close and closed lower than November open, a clear sign of bears being taking back control after bullish October and November. Three times there has been a Bearish Engulfing candle since the peak´, and every time a sell-off to new lows has followed.

Quarterly chart is changed to logarithmic scale to illustrate the magnitude of the Sup-prime/Financial Crisis 2007-2009. What is interesting is that the trough of the Corona-scare in 2020 is within few points of the 0.618 Fibonacci retracement of the 2009-2022 Bull market that followed the Sub-Prime crisis trough in March 2009. S&P 500 peaked on the first trading day of 2022.

To demolish this Bearish outlook a close above 4,352 is needed. 

Nasdaq 100
Nasdaq 100 didn’t even test its upper falling trendline before sellers took back control sending the Index close to October lows. If Nasdaq 100 closes below October trough at 10,440 there is support around 9,736 but potential for much lower levels.
A move to 9K seems likely. However, 9K is not a strong support level. In fact, there is not much support until around the 2020 lows at around 6,771 but Nasdaq could dip to 2019 lows below 6K.   

Weekly RSI is showing negative sentiment but also divergence i.e., the past months of selling has weakened. However, if RSI closes below its lower rising trendline and below 40 threshold RSI is likely to make a new low with lower Index levels. If Monthly RSI closes below 40 it will be the first time since 2008. But is also the first time since 2009 that it has been lower than 50 as it currently is.

On the monthly chart December formed a Bearish engulfing candle meaning sellers are in control. Well, sellers have been in control for the better part of 2022. Monthly RSI is still showing positive sentiment a monthly close below 40 is needed to change that to negative. However, a new low below October low will is likely top push RSI to negative with likely lower Index levels as a result.   

Quarterly chart changed to Logarithmic scale. Fibonacci retracement measured from the trough after the .com bubble implosion and the trough after the Sub-prime crisis places 0.618 retracement close to the trough at the Corona-scare in 2020 i.e., around 7K. That level could be reached if Nasdaq drops below 9,700 and panic spreads. The psychological dynamic should not be ignored.

For Nasdaq to reverse the down trend a weekly close above 13,721 is needed.

DAX

The overall picture and indicators for DAX are indicisive.
When DAX performed a weekly close above 13,985 back in early November it reversed the medium-term downtrend.
The Strength Indicator RSI went to show positive sentiment indication higher levels. However, with DAX failing to close above 14,958 the Index seems to be vulnerable and could turn negative. Down trend on daily time period is already confirmed but weekly has not yet reversed. IF DAX closes below its 200 weekly SMA the bearish picture is likely to unfold.

On the monthly chart DAX is in a down trend with RSI showing negative sentiment. A close above 14,709 is needed for DAX to resume uptrend. If DAX closes below its 55 monthly SMA we are likely to see a test of the support at around 11,556A close below could fuel a sell-off that is likely to push DAX to the 200 monthly SMA.

FTSE 100

For almost two years FTSE 100 has stuck in a range between 6,700 and 7,700. That picture could very well continue in 2022. If FTSE 100 closes below 7,300 a test of the lower band is likely.

If FTSE 100 closes below 6,700 the support area low at around 6,400 is likely to be tested.
If break out to the upside i.e., above 6,700 new all-time should be expected.

FTSE 250

For the UK economy FTSE 250 mid cap is probably more interesting to follow. The Index is in a down trend on all time periods.

Short-term it was rejected at its upper falling trendline and a move below the medium-term falling trendline is likely. If that occurs the bear trend will resume and most likely pick up pace and drop to lower levels around 15K. Support at around 16,700 is key.
On the monthly chart FTSE 250 bounced off the 0.618 retracement of the 2020-2021 bull market. Trend is still down and is likely to continue to around the 0.786 retracement and the 200 monthly moving average.
For FTSE 250 to reverse the down trend a close above 20,467 is needed.

Hang Seng Index

Is at a crossroad. 20,185 is key for further upside that could confirm a medium-term uptrend.
If it fails to close above and weekly RSI is rejected at the 60 threshold bear trend is likely to resume.

However, Hang Seng has formed what appears to be a Shoulder-Head-Shoulder pattern on the monthly chart. The Index has potential to drop to the strong support area 11,345-10,676.
RSI currently moving above 40 threshold but is still showing negative sentiment on both weekly and monthly chart, and if the strength Indicator RSI closes back below 40 we are likely to see new lows.

RSI divergence: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend