S&P 500, Dow Jones & Nasdaq 100 Charts: Monday’s Reversal Lows Hold the Key

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S&P 500/Nasdaq 100/Dow Jones Technical Highlights:

  • S&P 500 key-reversal day came at an important juncture
  • Dow Jones head-fake break and reverse helps create a floor
  • Nasdaq 100 holding up slightly better, showing some relative strength

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S&P 500 key-reversal day came at an important juncture

On Monday the market was headed for a breakdown below recent support towards the year-lows before reversing sharply to close slightly in the green. The key-reversal was a solid form of rejection and suggests the market may want to trade higher.

A close below support is the key here, and as long as the S&P 500 maintains above the Monday low at 2583 then focus shifts higher. Not looking of a rip-roaring rally, but rather a modest move higher towards the trend-line off the record high, November high at the very highest. The broader bias is still lower, but with the tail-end of the year near that may be staved off until we get into a new year.

S&P 500 Daily Chart (Key-reversal should keep stabilized)

S&P 500, Dow Jones & Nasdaq 100 Charts: Monday’s Reversal Lows Hold the Key

Dow Jones head-fake break and reverse helps create a floor

On Monday, the Dow broke several forms of support from trend-lines starting in February 2016 to February of this year to Oct/Nov lows, but selling was reversed to post a clean key-reversal candle. Yesterday we saw some selling after the gap, but just as long as the Dow doesn’t sink below 23881 we could see a modest lift in the near-term. Resistance clocks in at the 200-day running through just below 25100 and then there is the trend-line off the record high, followed by what is viewed as a best case scenario of reaching the Nov/Dec highs.

Dow Daily Chart (Fake-break and reverse)

S&P 500, Dow Jones & Nasdaq 100 Charts: Monday’s Reversal Lows Hold the Key

Nasdaq 100 holding up slightly better, showing some relative strength

The downside leading Nasdaq 100 has been a small bright spot of late as it didn’t trade to a lower low with the other two major indices, and for the most part held in positive territory Monday while the S&P 500 and Dow were off by a considerable amount. As is the case with the other two indices, the trend-line off the record highs will be in focus as resistance, followed by highs over the past month, the 200-day and underside of the Feb 2016 trend-line. A break below 6442 will bring in further carnage and a test of the year lows but seen as a lower probability event for now.

Nasdaq 100 Daily Chart (Holding above support)

S&P 500, Dow Jones & Nasdaq 100 Charts: Monday’s Reversal Lows Hold the Key

To learn more about U.S. indices, check out “The Difference between Dow, Nasdaq, and S&P 500: Major Facts & Opportunities.” You can join me every Wednesday at 10 GMT for live analysis on equity indices and commodities, and for the remaining roster of live events, check out the webinar calendar.

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—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX

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