U.S. Indices Technical Highlights:
- S&P 500 knocking on the door of new record highs
- Nasdaq 100 lagging behind but should also create a new record
- Dow Jones hasn’t quite fully cleared into new highs, but should soon
S&P 500, Dow Jones & Nasdaq 100 Forecast for the Days Ahead
The S&P 500 is trading just below the record high at 4545, but it appears only a matter of time, and very little time indeed before we see a new all-time high created. The pattern, as discussed in yesterday’s SPX video, was that once a new high is notched the market tends to trickle higher.
This can make trading a little tricky as vol compresses and the daily ranges contract. For existing longs from good prices this tends to be a fairly stress-free ride, but for those trying to enter the market not so much. Risk/reward for new longs diminishes with each new extension.
For those looking to short, this can be a very painful grind – death by a thousand cuts. In my opinion there are better ways to make money than trying to catch the high of a market. It is much more difficult than timing a bottom when it comes to stocks because most of the time there isn’t clear signs of exhaustion. At some point the market tends to turn with the pressure of its own weight versus a clearer panic situation that causes the VIX to spike hard and evidence of too much fear is abound.
At any rate, trading in record territory can become tough regardless of the side of the tape you are on. For those traders with very short-term objectives, looking to shallow pullbacks can be an effective strategy.
S&P 500 Daily Chart
S&P 500 Chart by TradingView
The Nasdaq 100 is lagging behind as the new-school growth names take a backseat to the old-school value names that dominate the Dow Jones. But even as such, as long as risk appetite remains firm we should see the NDX exceed its old high at 15696. From here it will take some hard, negative price action to turn the ship lower.
Nasdaq 100 Daily Chart
The Dow Jones poked its head into record territory yesterday, but ended up closing just beneath the 35625. Just a matter of time (today?) before it closes in record territory. From there, the outlook is the same of course as the broader market, look for a grind higher.
The Dow has been the leader and may continue to be so for a while, but it won’t be surprising if it starts to stall a bit in momentum while the Nasdaq catches up. Either way, the outlook is positive.
Dow Jones Daily Chart
Resources for Forex Traders
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—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX