Weekly Technical Outlook on Major Stock Indices 04 Dec to 8 Dec 2017

S&P 500 – Approaching major ascending channel resistance with mix element

Key Levels (1 to 3 weeks)

Resistances: 2668/83 & 2706

Supports: 2604, 2565 & 2543

Medium-term (1 to 3 weeks) Outlook

The U.S. SP 500 Index (proxy for the S&P 500 futures) had rallied as expected and hit the 2634/40 medium-term resistance/target (printed a high of 2658 on Thurs, 30 Nov U.S. session) (Click here for a recap on our previous weekly technical outlook).

In today (04 Dec), Asian session, the Index has staged a gapped up to print another fresh all-time high of 2663 as market reacted to the positive development on the U.S. tax reform plan where the  U.S. Senate approved its own version on the tax plan. Technically, the Index is now coming close to a major resistance zone at 2668/83 where a multi-week corrective decline may unfold next.

• The major resistance zone of 2668/83 is defined by the upper boundary of a major ascending channel from 11 Feb 2016 low (depicted in green) (see daily chart).
• Based on Elliot Wave Principal/fractal analysis, the intermediate degree bullish impulsive wave sequence in place since 09 Nov 2016, labelled as 3/ is coming close to a potential completion with a Fibonacci projection cluster target at 2668/83  (see daily & 4 hour charts).
• The daily RSI oscillator is coming close to an extreme overbought level of 85% since Mar 2017 which indicates that the current upside momentum of price action is being overstretched where the risk of pull-back/consolidation increases at this juncture.

Due to mix elements, we prefer to adopt a neutral stance between 2668/83 & 2604 and a break below 2604 is likely to trigger the start of a potential multi-week corrective decline to retrace the up move from 11 Feb 2016 low towards the next support at 2565 in the first step.

On the other hand, a clearance above 2683 shall see an extended rally to target the next resistance at 2706 (1.00 Fibonacci projection of the recent rally from 15 Nov 2017 low to 30 Nov 2017 high projected from last Fri low of 2604).

Nikkei 225 –  23010 remains the key medium-term resistance to watch

Key Levels (1 to 3 weeks)

Pivot (key resistance): 23010

Supports: 21830 (downside trigger), 21230/200 & 20840/715

Next resistance: 23420

Medium-term (1 to 3 weeks) Outlook

Last week, the Japan 225 Index (proxy for the Nikkei 225 futures) has continued to churn within a “triangle range” configuration in place since 15 Nov 2017 low and remained below the 23010 key medium-term resistance.

No change, we maintain the bearish bias below the 23010 medium-term pivotal resistance and a break below the 21830 downside trigger shall increase the bearish conviction for the Index to shape another minor degree bearish impulsive wave to target the next support at 21230/200.

However, a clearance above 23010 is likely to invalidate the bearish scenario for a squeeze up to retest 23420 swing high of 09 November 2017.

Hang Seng – Medium-term uptrend remains intact above 28870

Key Levels (1 to 3 weeks)

Pivot (key support): 28870

Resistances: 29600 (upside trigger), 30200 & 30700/780

Next supports: 28870 (downside trigger) & 28000

Medium-term (1 to 3 weeks) Outlook

The Hong Kong 50 Index (proxy for Hang Seng Index futures) had staged a deeper slide to inch below the 29300 medium-term support on last Fri, 01 Dec but managed to hold above the 28870 downside trigger level) (Click here for a recap on our previous weekly technical outlook).

In today (04 Dec) Asian session, the Index has managed to stage a rebound right at the 28870 downside trigger level which is defined by the medium-term ascending channel support from 04 Jul 2017 low. In addition, the 4 hour Stochastic oscillator has shaped a bullish divergence signal at its oversold region which indicates a slow-down in the recent downside momentum of its price action.

Therefore, the Index may start to see the start of another potential upleg at this juncture holding above the 28870 support and a break above 29600 (minor descending trendline from 22 Nov 2017 swing high) is likely to increase the odds for a further push up towards the next resistance at 30700/780 in  the first step.

However, a clear break below 28870 (daily close below) shall invalidate the recovery scenario for a potential corrective decline towards the next support at 28000.

ASX 200 – 5650 needs to be broken down to kick-start another round of potential corrective decline

Key Levels (1 to 3 weeks)

Pivot (key resistance): 6013/6033 (excess)

Supports: 5950 (downside trigger), 5860 & 5800

Next resistances: 6065 & 6130

Medium-term (1 to 3 weeks) Outlook

The Australia 200 Index (proxy for the ASX 200 futures) had staged a challenge on the 6013 medium-term pivotal resistance (printed a high of 6033 on last Wed, 29 Nov) before it retreated back below 6013 and traded sideways.

No major changes in its technical elements. We maintain our bearish bias below the 6013/6033 (excess) key medium-term pivotal resistance with 5950 as the downside trigger level to add impetus for a further potential corrective decline to target the next support at 5860 with a maximum limit set at 5800 (former range top from 13 Jun 2017 & the lower boundary of ascending channel from 10 Feb 2016 low).

On the other hand, a break above 6013/6033 shall invalidate the bearish scenario to see a squeeze up towards the next resistances at 6065 follow by 6130.

DAX – Still showing risk of a multi-week corrective decline below 13220

Key Levels (1 to 3 weeks)

Pivot (key resistance): 13220

Supports: 12800 (downside trigger), 12720/700 & 12520/500

Next resistance: 13530/560

Medium-term (1 to 3 weeks) Outlook

Last week, the Germany 30 Index (proxy for the DAX futures) had staged another test right below the 13220 key medium-term pivotal resistance (printed a high of 13197 on 29 Nov) before it retreated to test the 12847 downside trigger level on last Fri, 01 Dec (printed a low of 12811 before it rebounded) (Click here for a recap on our previous weekly technical outlook).

No major changes on its technical elements except we adjust slightly the downside trigger level to 12800 after taking into account of last Fri’s price action. Thus, we maintain our bearish bias below the 13220 key medium-term pivotal resistance and a break below 12800 is likely to increase the odds for the start of another potential multi-week corrective decline within its major uptrend to target the next supports at 12720/700 and even 12520/500 (Fibonacci cluster & the key major ascending channel support from 24 Jun 2016 low) before another potential bullish impulsive wave sequence materialises.

On the other hand, a clearance above 13220 is likely to invalidate the corrective decline scenario to see a squeeze up to retest 07 Nov 2017 swing high area of 13530/560.

Charts are from City Index Advantage TraderPro

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