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Technical Update - SP500 and Nasdaq taking out key supports. Sell in May is here early, will it continue?
Equities 5 minutes to read
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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