S&P 500, Nasdaq, Dow Technical Forecast: An Uneven Rally

Equities Technical Outlook: S&P 500, Nasdaq & Dow Weekly Trade Levels

• S&P 500 support 4048, 3973, 3920s (key) – resistance 4196, 4312, 4415
• NASDAQ support 13242, 12880 (key), 12208 – resistance 14349 (key), 14861, 15265
• Dow support ~33000, 32510/93 (key), 31861 – resistance 34302/738, 35492, 36231

The stock rally has been uneven with the Nasdaq vastly outpacing the S&P 500 and the Dow. A snapshot of the technical picture across all three major indices testifies to this disparity and the battle lines are drawn heading into the close of the month. These are the updated targets and invalidation levels that matter on the SPX500, NDX and DJI weekly technical charts.

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S&P 500 Price Chart – SPX500 Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; SPX500 on TradingView

Notes: The S&P 500 rallied to fresh yearly highs today with the index now attempting to breach above the objective 2023 opening-range. While the outlook remains constructive, the immediate advance may be vulnerable here – watch the weekly closes.

A topside breach from here would keep the focus on a key resistance confluence at the upper parallel /  61.8% Fibonacci retracement of the 2022 decline near 4312 and the 100% extension of the September advance at 4415 – both levels of interest for possible topside exhaustion / price inflection IF reached.

Look for support near the May lows at 4048- keep in mind this was a multi-week range low and a break / close below would be needed to suggest a larger pullback towards the 52- week moving average (currently ~3974) and channel support.

Bottom line: Failure to secure a weekly close above this threshold would leave the advance vulnerable into the close of the month. From a trading standpoint, losses should be limited to 4048 IF price is heading higher – look for a more significant reaction on stretch towards channel resistance. A close below the objective yearly open would be needed mark resumption of the broader 2022 decline.

Nasdaq Price Chart – NDX Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; Nasdaq on TradingView

Notes: Nasdaq is the best performer of the lot with NDX surging more than 9% off the April lows on a four-week rally. In fact, the index has rallied eight of the past ten weeks with a breakout of the yearly opening-range taking out the August highs this week.

The advance puts into focus the potential for a stretch towards a major resistance confluence around 61.8% retracement of the late-2021 decline at 14349- look for a more significant price reaction there IF reached with a close above needed to fuel a run on the March high-week close at 14861.

Initial support now rests with the August high-week reversal close at 13243 with bullish invalidation now raised to the objective February swing high at 12880.

Bottom line: The breakout is pressing overbought levels here and the threat of near-term exhaustion remains into confluent trend resistance. Look to reduce portions of long-exposure / raise protective stops on a stretch towards 14394– losses should be limited to 12880 IF price is heading higher on this advance.

Dow Jones Price Chart – DJI Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; Dow Jones on TradingView

Notes: Least impressive, has been the Dow – with the last seven-weeks contained within a 3.8% range just below resistance. Things here are as clear as mud.

Key resistance stands at the yearly high-week close, the objective December / January range highs and the February 2022 high-week reversal close at 34302/738. A breach / weekly close above this threshold is needed to validate a breakout of the yearly opening-range towards the 2022 high-week close 36231.

Weekly support rests at 33000 and is backed by the 61.8% retracement of the March advance / 52-week moving average at 32510/93. Ultimately, a break below the objective low-week close at 31862 would be needed to mark resumption towards the 61.8% retracement of the September rally at 30972.

Bottom line: The immediate range of influence is 32510-34302- look for a breakout to offer guidance with the March rally still viable while above the yearly moving average.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on Twitter @MBForex