Trade Deal Optimism From China Triggers Euphoric Mood An Update On SPX NDX Hang Seng

Another day, another U.S-China trade deal related news flow. If we can recall last than 24 hours ago, the media has reported that the signing of the U.S-China “Phase one trade deal” could be delayed until Dec over terms and venue according to an unnamed senior U.S. official that led to some profit-taking activities in Asian stock markets today.

Right before the open of today’s European session, the Chinese Commerce Ministry has issued a more positive response where its spokesman has commented that U.S. and China have agreed to cancel in phases the tariffs imposed over the past few months but did not mention any specify timeline.

The reaction from the markets have been positive so far; “risk on mood” has been switched on with the S&P 500 and Nasdaq 100 futures up by 0.44% and 0.54% coupled with fresh new all-time highs at 3092 and 8262 respectively at this time of writing.

From a technical analysis perspective, major stock indices have now pushed up into significant resistance zones where a negative catalyst can easily flip the table in favor for the bears.

S&P 500 – Watch 3120 key resistance

click to enlarge charts

The SP 500 Index (proxy for the S&P 500 futures) has pushed up by close to 0.50% at the open of today’s European session and cleared above the major “Expanding Wedge” range resistance now acting as a pull-back support at 3060.
Even though, the Index is still below the 3120 medium-term pivotal resistance as per highlighted in our weekly technical outlook report earlier (click here for a recap), there are not clear signs of bullish exhaustion at this juncture, prefer to turn neutral now between 3120 and 3060. Bears need to have a break below 3060 to get a foothold to kickstart a potential multi-week corrective decline towards 3018 and 2955 in the first step.
On flipside, a clearance with a daily close above 3120 sees a further squeeze up towards the next resistance 3190/220 (Fibonacci expansion cluster).

Nasdaq 100 – Watch 8330 key resistance

click to enlarge charts

The US Tech 100 Index (proxy for the Nasdaq 100 futures) has inched higher as well and it is now challenging the upper boundary of a major bearish “Ascending Wedge” configuration in place since Apr 2019.
Mix elements as well, bears need to have a break below 8120 (the minor ascending support from 03 Oct 2019 low) to open up scope for a potential multi-week corrective towards 8000 and 7800 next.
On the flipside, a clearance with a daily close above 8330 sees a further squeeze up towards 8500/560 (Fibonacci expansion cluster).

Hang Seng – 28100/200 upside target/resistance almost reached

click to enlarge charts

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has staged the expected extended corrective push up and almost hit the target/resistance of 28100/200 as per highlighted in our previous report.
Even though its latest price action is coming close to a significant medium-term resistance at 28200 (upper boundary of a medium-term ascending range from 15 Aug 2019 low, former swing low areas of 25 Jun/09 Jul 2019 & a Fibonacci retracement/expansion cluster) with upside momentum being overstretched (bearish divergence seen in the 4-hour Stochastic oscillator, the current price actions of the S&P 500 and Nasdaq 100 futures are not supportive of a bearish scenario.
Prefer to turn neutral first between 28200 and 27350. Bears need to have a break below 27350 for a potential corrective decline towards the 26500/100 zone. On the flipside, a clearance with a daily close above 28200 triggers an extension of the corrective rally to target the next resistance at 29000 (the major descending trendline from its all-time high level printed on 29 Jan 2018, 02 Jul 2019 swing high & 76.4% Fibonacci retracement of the previous decline from 03 May high to 15 Aug 2019 low.

Charts are from City Index Advantage

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.