Weekly Technical Outlook on Major Stock Indices 16 Oct to 20 Oct 2017

S&P 500 – Further potential upside above 2548/2540 support

Key Levels (1 to 3 weeks)

Intermediate support: 2548

Pivot (key support): 2540

Resistances: 2575 & 2590/2600

Next supports: 2510 & 2489

Medium-term (1 to 3 weeks) Outlook

Last week, the U.S SP 500 Index (proxy for the S&P 500 futures) has continued to grind higher as expected and printed another fresh all-time high of 2557 on Friday, 13 October in the U.S. session. Click here for a recap on our previous weekly technical outlook.

From a sector rotation analysis perspective, majority of the S&P 500 sectors that favour a “risk on” environment are still outperforming the benchmark S&P 500 according to ratio analysis based on the respective sectors ETFs except for consumer discretionary stocks (XLY).

Therefore, we are maintaining our bullish bias with a tightened key medium-term pivotal support at 2540 for a further potential up move to target the next resistances at 2575 follow by 2590/2600 next(upper boundary of a short-term ascending channel from 29 Aug 2017 low & a Fibonacci projection cluster).

However, failure to hold above 2540 shall negate the bullish tone of the current medium-term uptrend in place since 21 August 2017 low for a deeper corrective pull-back/consolidation towards the next support at 2510 (close to the 38.2% Fibonacci retracement of the on-going up move from 21 Aug 2017 low to 13 Oct 2017 high & the former minor range resistance of 21/27 Sep 2017).

Nikkei 225 – No signs of bullish exhaustion

Key Levels (1 to 3 weeks)

Intermediate support: 21180/100

Pivot (key support): 20930

Resistances: 21630/690 & 21900/22000

Next support: 20250

Medium-term (1 to 3 weeks) Outlook

Last week, the Japan 225 Index (proxy for the Nikkei 225 futures) has continued its expected relentless rally and hit our medium-term resistance/target of 21200 as the market braces for the upcoming Japanese national election on 22 October 2017.  Click here for a recap on our previous weekly technical outlook.

Latest poll from Mainichi Shimbun as at Monday, 16 October has indicated a potential landslide victory for PM Abe’s conservation LDP (projected to win 303 seats of the 465 seats available in the Lower House) as the new party, Party of Hope founded by Abe’s main rival, Tokyo Governor Koike loses momentum. Current key technical elements as follow;

• The daily RSI oscillator has reached an extreme overbought level of 80% seen on 09 December 2016 but it has not flashed any bearish divergence signal. These observations suggest that medium-term upside momentum of price action remains intact.
• The key medium-term support now rests at 20930 which is defined by the lower boundary of an ascending channel in place since 08 September 2017 low and the former medium-term swing high area of 24 Jun/11 Aug 2015 that was broken to the upside last week (see daily chart).
• The next significant medium-term resistance stands at 21900/22000 which is defined by the upper boundary of the aforementioned ascending channel and a Fibonacci projection cluster (see daily & 4 hour charts).

Therefore, we maintain our bullish bias on the Index with a tightened key medium-term pivotal support now at 20930 for a further potential up move to target the next resistances at 21630/690 follow by 21900/22000 next.

On the other hand, failure to hold above 20930 shall invalidate the upside extension scenario for a corrective decline towards the next support at 20250 (range congestion from 22 Sep/27 Sep 2017 & the 50% Fibonacci retracement of the on-going rally from 29 Aug 2017 low).

Hang Seng – 28570 upside trigger surpassed, further potential upside

Key Levels (1 to 3 weeks)

Intermediate support: 28570/500

Pivot (key support): 28240

Resistances: 29100, 29300 & 29600

Next supports: 27300 & 26830

Medium-term (1 to 3 weeks) Outlook

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has continued to rally as expected and surpassed the 28570 upside trigger level. Click here for a recap on our previous weekly technical outlook.

Technical elements remain positive such as the daily RSI has continued to inch upwards after its prior bullish breakout from its former resistance at the 58% seen on 04 October 2017. Current level of the daily RSI still has potential room for further upside before it reaches an extreme overbought level of 86% seen on 13 April 2015. These observations suggest that medium-term upside momentum of price action remains intact.

Therefore, we maintain our bullish bias with the key medium-term pivotal support now at 28240 for a further potential up move to target the resistances of 29100 and 29300. A break above 29300 is likely to see a further potential acceleration towards the next resistance of 29600 (close to the upper boundary of a short-term ascending channel from 28 Sep 2017 low & Fibonacci projection cluster).

However, a break below 28240 may negate the bullish tone to open up scope for a deeper pull-back towards the next support at 27300 (swing low areas of 26/28 Sep 2017).

ASX 200 – Bullish breakout from 4-month range configuration

Key Levels (1 to 3 weeks)

Intermediate support: 5830

Pivot (key support): 5800

Resistances: 5905, 5944/950 & 6000

Next supports: 5750 & 5660/645

Medium-term (1 to 3 weeks) Outlook

The Australia 200 Index (proxy for the ASX 200 futures) has staged a bullish breakout above its 5800 former range resistance after a 4-month sideways configuration since June 2017.

We turn bullish above 5800 key medium-term pivotal support for a further potential up move to target 5905 follow by the next resistance at 5944/950 (upper boundary of a short-term ascending channel from 05 October2017 low & the 2.00 Fibonacci projection of the rally from 05 Oct 2017 low to 09 Oct 2017 high projected from 10 Oct 2017 low).  

On the other hand, failure to hold above 5800 is likely to indicate a failure bullish breakout for another round of choppy down move towards the next support at 5750. 

DAX – Uptrend remains intact

Key Levels (1 to 3 weeks)

Intermediate support: 12980

Pivot (key support): 12890

Resistances: 13150, 13240 & 13435/560

Next supports: 12650 & 12300

Medium-term (1 to 3 weeks) Outlook

Last week, the Germany 30 Index (proxy for the DAX futures) has continued to inch higher as expected and printed a fresh new all-time high of 13039 on Friday, 13 October.

No major changes in its technical elements even though the daily RSI oscillator has reached an extreme overbought level of 80% seen on 05 May 2017 but it has not flashed any clear bearish divergence signal.

Therefore, we maintain our bullish bias above the 12890 key medium-term pivotal support for a further potential up move to target the next resistances of 13150 follow by 13240 next in the first step.

However, failure to hold above 12890 should negate the bullish tone to for a deeper slide to retest the 12650 support. Only clear break below 12650 (daily close) is likely to trigger a potential corrective down move towards the next support at 12300 (former range resistance of 26 Jul/08 Aug/16 Aug 2017).

Charts are from City Index Advantage TraderPro & eSignal

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