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S&P 500, Nasdaq, Dow Technical Forecast: Rallies May Falter into Q2

S&P 500 Technical Price Outlook: Near-term Trade Levels

  • S&P 500, Nasdaq & Dow technical trade level update – Weekly Charts
  • SPX500 recovery faltering into Fibonacci resistance at 4547 – Initial support 4429
  • Nasdaq threatens false break – rally eyeing resistance at 15334 – Initial support 14420
  • Dow advance capped by Fibonacci resistance at 35164 – Initial support 33613
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Stocks are mixed ahead of the weekly close with recoveries in all three-major US equity indices beginning to falter into technical resistance. While the broader outlook heading into the start of Q2 remains constructive, the immediate advance may be vulnerable and we’re on the lookout for possible price exhaustion in the weeks ahead. These are the targets and invalidation levels that matter on the S&P 500 (SPX500), Nasdaq (NDX) and the Dow Jones Industrial Average (US30) weekly technical price charts. Review my latest Strategy Webinar for an in-depth breakdown of these technical stock setups and much more.

S&P 500 Price Chart – SPX500 Weekly

S&P 500 Price Chart - SPX500 Weekly - SPX Trade Outlook - ES Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; SPX500 on Tradingview

Technical Outlook: In my last S&P500 Technical Outlook we noted the SPX500 rebound off uptrend support (red) was approaching, “the 52-week moving average, putting initial resistance at 4392– a breach / close above this threshold is needed to shift the near-term focus higher towards the 61.8% Fibonacci retracement of 2022 range at 4547.” Price spent another two weeks ranging above the lows before marking an outside weekly-reversal off confluent support at 4197.

This week, the index registered an intra-day high at 4639 before pulling back with price now struggling to mark a weekly close above 4547– failure to do so would threaten a pullback early in the month with initial support now back at the 52-week moving average (currently ~4429). Broader bullish invalidation now raised to the 61.8% retracement of the recovery at 4309.

Bottom line: The S&P 500 may be vulnerable into the April open after rally a full 13% rally off the yearly lows. While the broader outlook remains constructive, the threat of another test of the lows remains heading into Q2. From at trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops- losses should be limited to 4309 IF price is indeed heading higher with a breach above the high-week close at 4677 needed to fuel another run at the record highs at 4820. Ultimately, break below 4197 could prove terminal for the broader uptrend with such a scenario to threaten a much larger correction toward the May lows at 4035 and 3812.

S&P 500 Trader Sentiment – US500 Price Chart

S&P 500 Trader Sentiment - US500 Price Chart - SPX500 Trade Outlook - SPX Technical Forecast

  • A summary of IG Client Sentiment shows traders are net-short the S&P 500- the ratio stands at -1.08 (48.19% of traders are long) – typically neutralreading
  • Long positions are6.28% higher than yesterday and 4.53% higher from last week
  • Short positions are 11.24% lower than yesterday and 6.31% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests US 500 prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. From sentiment standpoint, recent changes in positioning warn that the current US 500 price trend may soon reverse lower despite the fact traders remain net-short.

Nasdaq 100 Price Chart – NDX Weekly

Nasdaq 100 Price Chart - NDX Weekly - Nasdaq Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; NDX on Tradingview

Notes: Was this break below parallel slope support a false move? Nasdaq marked an outside-weekly reversal just ahead of confluent lateral support at the 2021 low-week close / 38.2% retracement (12668/947). The rally registered an intra-week high just ahead of the 61.8% retracement of the November decline at 15334– a weekly close above this threshold is needed to keep the focus higher with bearish invalidation just higher at the high-week close (16025). Initial support now rests with the yearly low-week close at 14420 with a break back below the February 2020 highs at 13879 needed to put the bears back in control.

Bottom line: A recovery of more than 17% takes the Nasdaq recovery back towards the 52-week moving average (~14863) – risk for topside exhaustion while below 15334 and be on the lookout for a possible exhaustion low early in the month. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to 14420 IF price is heading higher on this stretch with a close above 16025 needed to mark resumption of the broader Nasdaq uptrend.

Dow Jones Industrial Average Price Chart – US30 Weekly

Dow Jones Industrial Average Price Chart - US30 Weekly - Dow Jones Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; US30 on Tradingview

Notes: A very simple setup here in the Dow has continued guide price-action with precision here. In our last updated, we noted that DJI had, “dropped into key support at the 100% extension / 23.6% retracement at 32049/530before rebounding sharply. So was that the low? Expect some noise here as price consolidates above the this key zone with resistance eyed at the 52-week moving average / median-line near 34767.” An intraday high registered just above Fibonacci resistance at 35164 before pulling back with the index poised to close back below the median-line.

A rally of more than 9% off the lows leaves the index rather vulnerable heading into start of Q2. Initial weekly support now rests back at 33613 with the outlook still constructive while above 32021– weakness below this threshold would suggest a more significant yearly high is in place. A topside breach from here keeps the focus on the high-day close at 36231– look for a larger reaction there IF reached for guidance.

Bottom Line: The Dow recovery may be vulnerable here near-term while below 35164 and a near-term pullback in price may offer more favorable opportunities closer to trend support. From at trading standpoint, a good region to reduce portions of long-exposure / raise protective stops- losses should be limited to 33613 IF price is indeed heading higher. Remain nimble into the monthly open and stay tuned!

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Active Weekly Technical Setups

-Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michaelon Twitter @MBForex

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