Weekly Technical Outlook on Major Stock Indices 20 Nov to 24 Nov 2017

S&P 500 – Continues to evolve in a toppish configuration

Key Levels (1 to 3 weeks)

Intermediate resistance: 2588

Pivot (key resistance): 2597

Supports: 2565 (downside trigger), 2544 & 2520

Next resistance: 2634

Medium-term (1 to 3 weeks) Outlook

The U.S SP 500 Index (proxy for the S&P 500 futures) pushed down at start of last week and attempted to break below the 2565 medium-term downside trigger level (printed a low of 2556 on last Wed, 15 Nov) before it rebounded. (Click here for a recap on our previous weekly technical outlook).

Interesting, the rebound stalled righted at the 25855 intermediate resistance before it retreated again on last Fri, 17 Nov. No major changes in its technical elements as it has continued to trace a minor bearish “Head & Shoulders” toppish configuration with its corresponding neckline support of the configuration at 2565.

In addition, the two major cyclical sectors (Industrials & Financials) with a combined weightage of 24% in the S&P 500) have continued to underperform the S&P 500 based on their respective relative strength analyses on the sectors exchange traded funds (ETFs)

Therefore, we maintain our initial bearish bias. As long as the 2597 key medium-term pivotal resistance is not surpassed and a clear break below 2565 downside trigger is likely to reinforce the start of a potential multi-week corrective decline to target the next supports at 2544 and 2520 next within a longer-term primary uptrend that is still intact since February 2016 low.

On the other hand, a clearance above 2597 shall invalidate the bearish corrective decline scenario to open up scope for another round of bullish upleg towards the next resistance at 2634.

Nikkei 225 – Multi-week corrective decline phase remains intact

Key Levels (1 to 3 weeks)

Intermediate resistance: 22800

Pivot (key resistance): 23010

Supports: 21830, 21230/200 & 20840/715

Next resistance: 23420

Medium-term (1 to 3 weeks) Outlook

The first half of last week saw the Japan 225 Index (proxy for the Nikkei 225 futures) dropped further as expected and hit the intermediate support/target of 22000 (printed a low of 21831 on last Wed, 15 Nov) before it rebounded. (Click here for a recap on our previous weekly technical outlook).

Current key elements remain bearish as follow:

• The aforementioned price action rebound from the 22000 intermediate support has stalled right below a predefined intermediate resistance of 22800 which also coincides with the pull-back resistance of the former ascending channel support from 08 September 2017 low.
• The next significant medium-term supports rest at 21230/200 (50% Fibonacci retracement of the previous advance from 28 Aug 2017 low to 09 Nov 2017 high & the lower boundary of the minor descending channel in place since 09 Nov 2017 high) follow by 20840/715 (61.8% Fibonacci retracement of the previous advance from 28 Aug 2017 low to 09 Nov 2017 high & the former major swing high area of 21 Jun/09 Aug 2015).

Therefore, we maintain our initial bearish bias below the 23010 key medium-term resistance to see the start of another potential downleg to retest 21830 and below it reinforces a further decline to target the next support at 21230/200.

On the other hand, a break above 23010 shall jeopardize the bearish scenario for a squeeze up to retest 23420 swing high of 09 November 2017.

Hang Seng – Still stuck below 29300 resistance

Key Levels (1 to 3 weeks)

Resistances: 29300 & 30230

Supports: 28000 & 26830

Medium-term (1 to 3 weeks) Outlook

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has continued to trade sideways below the 29300 key medium-term resistance with mix elements.

No change in our view, we maintain a neutrality stance between 29300 and 28000.  Only a clear break below 28000 (daily close below it) is likely to trigger a potential multi-week corrective decline to target the next support at 26830.

ASX 200 – Further potential corrective decline through bearish break of 5970

Key Levels (1 to 3 weeks)

Pivot (key resistance): 5990

Supports: 5860 & 5800

Next resistance: 6065

Medium-term (1 to 3 weeks) Outlook

Last, the Australia 200 Index (proxy for the ASX 200 futures) had broken below the lower limit of the neutrality range at 5970 which increases the probability of a multi-week corrective decline. Current key elements are as follow;

• The daily RSI oscillator has shaped a bearish break below its first support at 57% and still has room to inch lower before it reaches the significant second support at the 41% level. These observations suggest downside momentum of price action remains intact.
• The key medium-term resistance stands at 5990 which is defined by the 50% Fibonacci retracement of the recent decline from 09 Nov 2017 high to 15 Nov 2017 low and close to the upper boundary of the minor descending channel in place since 09 Nov 2017 high.
• The next significant medium-term supports rest at 5860 (lower boundary of the minor descending channel in place since 09 Nov 2017 high & 50% Fibonacci retracement of the previous advance from 04 Oct 2017 low to 09 Nov 2017) follow by 5800 (61.8% Fibonacci retracement of the previous advance from 04 Oct 2017 low to 09 Nov 2017 & the pull-back support of the former range resistance from 14 Jun 2017).

Therefore, we turn bearish below 5990 key medium-term pivotal resistance for another potential downleg of the multi-week corrective decline phase from 09 Nov 2017 high to target the next support at 5860 in the first step.

However, a clearance above 5990 shall invalidate the bearish scenario to see a squeeze up towards the next resistance at 6065.

DAX – Multi-week corrective decline phase remains intact

Key Levels (1 to 3 weeks)

Intermediate resistance: 13110

Pivot (key resistance): 13220

Supports: 12720/700 & 12520/500

Next resistance: 13530/560

Medium-term (1 to 3 weeks) Outlook

The Germany 30 Index (proxy for the DAX futures) had tumbled as expected and hit the intermediate support/target of 12900 (printed a low 12847 on last Wed, 15 Nov) before it staged a rebound. (Click here for a recap on our previous weekly technical outlook).

In today (20 Nov) Asian session, the Index has reversed down and it is now attempting to stage a breakdown below 12900. The current decline has been reinforced by the failure of German Chancellor Markel failed to form a three-way coalition government with her coalition partners that has increased the risk premium in Eurozone due to political uncertainty.

No change, we maintain our bearish bias on the Index for another round of potential downleg on this on-going multi-week corrective phase in place since 07 Nov 2017 high within a longer-term primary uptrend from Feb 2016 low.

As long as the tightened 13220 medium-term pivotal resistance is not surpassed, the Index is likely to stage another potential dowleg to target the next supports at 12720/700 follow by 12520/500 next (61.8% Fibonacci retracement of the previous up move from 29 Aug 2017 low to 07 Nov 2017 high & the lower boundary of the long-term ascending channel from 24 Jun 2016 low). 

On the other hand, a clearance above 13220 shall 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 & eSignal

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