Stock Indices Weekly Technical Outlook Bulls Rescued By Verbal Mini Trade Deal

S&P 500 – Further push up to retest all-time high

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Key Levels (1 to 3 weeks)

Intermediate support: 2955

Pivot (key support): 2940/35

Resistances: 3028 & 3050/70

Next support: 2855

Directional Bias (1 to 3 weeks)

Last Fri 11 Oct, the SP 500 Index (proxy for the S&P 500 futures) has cleared above the upper limit of 2960 neutrality range as per highlighted in our previous report (click here for a recap) on the backdrop of an increase in optimism over phase 1 “mini verbal trade deal” struck between U.S. and China. Flip to a bullish bias in any dips above 2940/35 key medium-term pivotal support for a further potential push up to retest the 3028 current all-time high before targeting a major resistance zone of 3050/70.

On the other hand, a break with a daily close below 2935 invalidates the bullish scenario for another choppy decline towards 2855 (the ascending range support from 03 Jun 2019 low).

Key elements

• Since 26 Jan 2018 high, the Index has continued to evolve within a major bearish “Expanding Wedge” configuration with the upper limit now coming in at 3050, also confluences closely with a Fibonacci expansion cluster at 3070.
• The daily RSI oscillator has started to inch upwards above a corresponding ascending support at the 40 level.
• Relative strength analysis has indicated that the Technology sector (XLK), the largest sector with a market weightage of 22% in the S&P 500 has outperformed the S&P 500. Its ratio chart that has staged a bullish breakout to form a new high. This observation suggests the higher-beta Technology sector is now playing a leadership role which is likely to add impetus for the S&P 500 to see further potential upside.

Nikkei 225 – Further potential push up towards major range resistance

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Key Levels (1 to 3 weeks)

Intermediate support: 21600

Pivot (key support): 21200

Resistances: 22490 & 23050

Next support: 20400

Directional Bias (1 to 3 weeks)

The Japan 225 Index (proxy for the Nikkei 225 futures) has broken above 21750 key medium-term resistance that has invalidated the preferred push down scenario towards the ascending range support of 20400.

Flip to bullish bias now in any dips (as the 4-hour Stochastic oscillator has exited from its overbought region) above 21200 key medium-term pivotal support for a further potential push up towards the 22490 (03 May 2019 high) and 23050 next (upper boundary of a minor ascending channel from 26 Aug 2019 low & the long-term key range resistance).

On the other hand, a break with a daily close below 21200 invalidates the bullish scenario for a slide back towards the 20400 major ascending range support in place since 26 Dec 2018 low.

Hang Seng – Still capped by a medium-term descending trendline

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Key Levels (1 to 3 weeks)

Supports: 26130, 25500 & 24870/500

Resistances: 27400, 28060 & 29000

Directional Bias (1 to 3 weeks)

The Hong Kong 50 Index (proxy for Hang Seng Index futures) has broken above the former range resistance of 26500 in place sin 30 Sep 2019 but it still trading below 27400 (descending resistance from 03 May 2019 & 13 Sep 2019 swing high).

Mix elements, prefer to turn neutral now between 27400 and 26130. A clearance above 27400 opens up scope for a further corrective rebound towards 28060 follow by 29000 next (24 Jun 2019 swing high & 76.4% Fibonacci retracement of the previous multi-month decline from 03 May high to 15 Aug 2019 low). On the flipside, a daily close below 26130 revives the bearish tone for a slide to retest last week swing low area of 25500 and even the major range support of 24870/500.

ASX 200 – Mean reversion rebound in progress

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Key Levels (1 to 3 weeks)

Pivot (key support): 6590

Resistance: 6750

Next support: 6355

Directional Bias (1 to 3 weeks)

The Australia 200 Index (proxy for the ASX 200 futures) has staged the expected mean reversion rebound and surpassed the first target/resistance of 6605 as per highlighted in our previous report.

No change in key elements; maintain bullish bias in any dips (the 4-hour Stochastic oscillator has inched down from its overbought region) above the tightened 6590 key medium-term pivotal support for a further potential push up to target the next resistance at 6750 (upper boundary of a “Symmetrical Triangle” range resistance from 30 Jul 2019 high & 0.764 Fibonacci expansion of the rebound from 15 Aug low to 20 Sep 2019 high projected from 24 Aug 2019 low). On the other hand, a break below 5680 sees a slide retest the “Symmetrical Triangle” range support at 6500 and also the “Expanding Wedge” support in place since 27 Mar 2019 low

DAX – Further potential push up towards “Expanding Wedge” resistance

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Key Levels (1 to 3 weeks)

Intermediate support: 12300

Pivot (key support): 12120

Resistances: 12800

Next support: 11850

Directional Bias (1 to 3 weeks)

The Germany 30 Index (proxy for the DAX futures) has broken above the 12170 upper limit of the neutrality range zone which has validated the bullish scenario within “Expanding Wedge” rang configuration in place since 03 May 2019 high.

Flip to a bullish bias in an dips (4-hour Stochastic oscillator has inched down from overbought zone) towards the 12300 intermediate support (38.2% Fibonacci retracement of the last Fri’s steep rally from 08 Oct low to 12 Oct 2019 high of 12563) with 12120 as the key medium-term pivotal support for a further potential push up to target the next resistance at 12800 (upper boundary of the minor ascending channel from 15 Aug 2019 low & a Fibonacci retracement/expansion cluster).

On the other hand, a daily close below 12120 negates the bullish tone for a slide back to retest 11850 (congestion zone from 06 Feb 2018).

Charts are from City Index Advantage TraderPro & eSignal