Stock Indices Weekly Technical Outlook New all time high US stock market with euphoric mood

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).

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