Weekly Technical Outlook on Major Stock Indices 13 May to 17 May 2019 Part 1

S&P 500 – Further corrective down move in progress

click to enlarge charts

Key Levels (1 to 3 weeks)

Intermediate resistance: 2900

Pivot (key resistance): 2920

Supports: 2790 & 2730

Next resistance: 2959 & 3007

Medium-term (1 to 3 weeks) Outlook

The SP 500 Index (proxy for the S&P 500 futures) has shaped the expected decline as per highlighted in our previous weekly outlook report and met the first support/target of 2875/56 (click here for a recap).

It printed a low of 2835 in yesterday, 09 May early U.S. session before it shaped a bounce of 1.2% to end the U.S. session at 2870 on the backdrop of a tense U.S/China trade relation. Trade officials from both sides have entered the final stretch of a 2-days negotiation talk in Washington to hammer out a deal before U.S. administration imposes additional tariffs on Chinese imports after 12.00 am U.S. time on Friday, 10 May. Technical elements are still negative as follow;

The medium-term uptrend in place since 26 Dec 2018 low has been damaged as price action to the Index has shaped a bearish reversal “Ascending Wedge” configuration in shape since 08 Mar 2019 (this type of chart pattern tends to form at the end of an uptrend and likely trigger a volatile movement in the opposite direction of the prior trend). Interestingly, the rebound that has occurred after its earlier gapped down (also the bearish break of the “Ascending Wedge”) seen on Mon, 06 May after U.S. President Trump’s tariffs threat to China fired on Sun has retested and reacted off the former “Ascending Wedge” support now turns pull-back resistance at 2920.
The 2920 resistance also confluences closely with the 61.8% Fibonacci retracement of the on-going slide from 01 May 2019 all-time high to 09 May 2019 low of 2835
Medium-term momentum remains negative as the daily RSI oscillator remains below 50 and still has room to manoeuvre to the downside before it reaches an extreme oversold level of 25.
The VIX futures has continue to incher this week after it tested the “complacency zone of 12.80/10.10 on 15 Apr 2019. It has room for further potential upside before it reaches the “fear zone” of 26.40/28.25 which translates to further downside potential in the S&P 500 before the bears capitulate.

Therefore, we maintain the bearish bias below a tightened key medium-term pivotal resistance at 2920 for another round of potential impulsive downleg to target the next supports at 2790 and 2730.

On the other hand, a clearance with a daily close above 2920 invalidates the bearish scenario for a continuation of the 5-month uptrend to retest its current all-time high at 2959 and even 3007 next (Fibonacci expansion).

Nikkei 225 – Bearish breakdown below 21880/900

click to enlarge charts

Key Levels (1 to 3 weeks)

Intermediate resistance: 21645

Pivot (key resistance): 21900

Supports: 20900 & 20185

Next resistances: 22490 & 22800/23050

Medium-term (1 to 3 weeks) Outlook

The Japan 225 Index (proxy for the Nikkei 225 futures) has staged the bearish breakdown below the 21880 lower limit of the neutrality zone on Tues, 07 May U.S. session as per highlighted in our previous report. Thus, a multi-week corrective down move scenario has been validated.

Technical elements remain negative and the key medium-term pivotal resistance to watch will be at 21900 for a potential down move to target the next supports at 20900 before 20185.

On the other hand, a clearance with a daily close above 21900 invalidates the bearish scenario for a squeeze up towards 22490 and 22800/23050.

Charts are from City Index Advantage TraderPro & eSignal

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.