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S&P 500 – 3120 met with FOMO traits

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The SP 500 Index (proxy for the S&P 500 futures) has continued to inch higher and hit the 3120 key medium-term pivotal resistance in last Fri, 15 Nov as per highlighted in our previous report (click here for recap) on the back drop of another round of U.S-China Phase One trade deal optimism.  Also, health care related stocks have contributed the bulk of last Fri, 15 Nov up move where the Health Care sector (XLV) ETF staged a rally of 2.2% (the best performing sector) after the U.S. White House announced an initiative to increase price transparency from hospitals and insurers.

Maintain bearish bias with 3120 remains as the key medium-term pivotal resistance and a break below 3060 is required to reinforce the start of a potential corrective down move to target the next support at 3018 in the first step.

However, a clearance with a daily close above 3120 invalidates the bearish scenario for a further squeeze up towards the next resistance 3190/220 (Fibonacci expansion cluster).

Key elements

• 30060 downside trigger level is defined by the pull-back support of the former major “Expanding Wedge” range resistance (see daily chart).
• From a relative strength analysis on the key “risk-on” sectors, the Consumer Discretionary (XLY) and Industrial (XLI) are still now showing any signs of clear outperformance against the S&P 500. Both these sectors have a combined weightage of 19% versus a 22% weightage in the Technology sector (XLK).
• The VIX futures has continued to drift downwards to print a low of 12.85 on last Fri, 15 Nov where it is now hovering right at the 12.80/10.10 “complacency zone”. From a contrary opinion perspective, this observation indicates a relatively high degree of “greed/fear of missing out” behaviour traits where the risk of a downside reversal in price action increases at this juncture as any price sensitive news flow can disappoint the mood of the market easily.

Nikkei 225 – Further potential drop

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Key Levels (1 to 3 weeks)

Pivot (key resistance): 23450/23650 (excess)

Support: 22420/170

Next resistance: 24400

Directional Bias (1 to 3 weeks)

The Japan 225 Index (proxy for the Nikkei 225 futures) has drifted down as expected by -2.3% from 12 Nov high of 23582 to print a low of 23012 on 14 Nov before it retraced 61.8 of the earlier losses on last Fri, 15 Nov.

Maintain bearish bias below the 23650 (excess) medium-term pivotal resistance for a further potential drop towards the 22420/170 support zone. However, a clearance with a daily close above 23650 invalidates the bearish scenario for an extension of the up move towards the next resistance at 24400 (01 Oct 2018 major swing high area).

Key elements

• The daily RSI oscillator is now testing a corresponding ascending support from its oversold region after a bearish divergence signal formed on 28 Oct 2019. A break below the ascending support reinforces a further drop in price action.
• The 22420/170 support is defined by the lower boundary of the medium-term ascending channel in place since 26 Aug 2019 low and a Fibonacci retracement cluster.

Hang Seng – Bounce before another potential leg of corrective decline

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Key Levels (1 to 3 weeks)

Intermediate resistance: 26890

Pivot (key resistance): 27350

Support: 25500

Next resistance: 28000

Directional Bias (1 to 3 weeks)

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has tumbled as expected and almost met the 26100 downside target/support as per highlighted in our previous report (printed a low of 26197 on 14 Nov).

Maintain bearish bias in any bounces below adjusted key medium-term pivotal resistance now at 27350 for another potential corrective down move to target the next support at 25500 (10 Oct 2019 swing low & 76.4% Fibonacci retracement of the up move from 15 Aug low to 07 Nov 2019 high).

However, a clearance with a daily close above 27350 negates the bearish tone for a push up to retest 28000

Key elements

• The daily RSI oscillator has broken below a corresponding ascending support from its oversold region which reinforces a revival of medium-term downside momentum.
• The shorter-term 4-hour Stochastic oscillator has exited its oversold region with a prior bullish divergence signal that indicates last week’s price action decline has been overstretched. The Index now faces the risk of a minor rebound towards the gap resistance of 26890.
• The 27350 key medium-term pivotal resistance is defined by the former medium-term swing high of 13 Sep 2019 and close to the 61.8% Fibonacci retracement of the recent decline from 07 Nov high to 15 Nov 2019 low.

ASX 200 – Tolerate the excess resistance to 6800

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Key Levels (1 to 3 weeks)

Pivot (key resistance): 6780/800

Supports: 6680, 6610 & 6500

Next resistance: 6878

Directional Bias (1 to 3 weeks)

Last week, the Australia 200 (proxy for the ASX 200 futures) has staged a challenge on the 6780 key medium-term pivotal resistance (printed a high of 6801 on last Fri, 15 Nov) before it reversed back below 6780 in today, 18 Nov Asian session.

Elements are not convincing in order to validate a bullish scenario at this juncture, thus tolerate the excess and maintain the bearish bias below 6800 pivotal resistance. A break below 6680 reinforces a further potential drop towards the next support at 6610 in the first step.

However, a daily close above 6800 invalidates the bearish scenario for a squeeze up to retest the 30 Jul 2019 swing high/all-time high area of 6878.

Key elements

• The daily RSI oscillator is still below a significant corresponding resistance at the 60 level.
• The Index has started to evolve within a minor bearish “Ascending Wedge” range configuration in place since 21 Oct 2019 low with upper boundary/resistance at 6800 and lower boundary/support at 6680.
• The 4-hour Stochastic oscillator has displayed a bearish divergence signal which indicates the recent upside momentum of price action from 14 Nov 2019 low has started to ease.

DAX – 13350 remains the key resistance to watch

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Key Levels (1 to 3 weeks)

Pivot (key resistance): 13200/350 (excess)

Supports: 13110 (trigger), 12800 & 12600/500

Next resistance: 13600 (all-time high)/750

Directional Bias (1 to 3 weeks)

The Germany 30 Index (proxy for the DAX futures) has traded sideways below the 13350 key medium-term pivotal resistance as per highlighted in our previous report.

No change in key elements; maintain bearish bias and a break below the 13110 downside trigger level is required to reinforce the start of a potential corrective decline to target the next supports at 12800 and 12600/500.

However, a clearance with a daily close above 13350 invalidates the bearish scenario for an extension of the up move to retest the current all-time high level of 13600/750 (Fibonacci expansion cluster).

Charts are from City Index Advantage TraderPro & eSignal