Weekly Technical Outlook on Major Stock Indices 01 Apr to 5 Apr 2019

Stock indices rallied towards key resistances on upbeat China manufacturing PMI

S&P 500 – Watch the 2875 resistance



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Key Levels (1 to 3 weeks)

Pivot (key resistance): 2875

Supports: 2785 (trigger) & 2730

Next resistance: 2940

Medium-term (1 to 3 weeks) Outlook

In today’s 01 Apr Asian session, the SP 500 Index (proxy for the S&P 500 futures) has staged a gap up by close to 20 points from last Fri 29 Mar, U.S. session close of 2835 to print a current intraday high of 2855. The gapped up is being reinforced by an air of optimism that the China’s economy has started to bottom out. Its latest Mar manufacturing PMI data (official & Caixin) that have inched back to growth level territories (a reading of above 50 where the official PMI increased to 50.5 from 49.2 in Feb & Caixin PMI increased to 50.8 from 49.9 in Feb).

The current intraday high of 2855 is just 0.7% away from the 2875 key medium-term pivotal resistance as per highlighted in our previous weekly outlook report (click here for a recap). Key technical elements remain the same;

  • The daily RSI oscillator remains below a corresponding resistance at the 60 level after its bearish divergence signal seen on 21 Mar 2019. This observation suggests that there are still no clear signs of resurgence of medium-term upside momentum.  
  • Based on relative strength analysis of the 5 key high beta indices/sectors (Nasdaq 100, Russell 2000, Semiconductor sector, NYSE FANG+ & Financials sector against the S&P 500), only the Nasdaq 100 has outperformed the S&P 500 (refer to the 3rd chart).

Therefore, we maintain the bearish bias for a potential multi-week decline to retrace the 21% rally from its 26 Dec 2018 low. 2785 will be the downside trigger level and a break below it reinforces the potential decline to target 2730 next (08 Mar 2019 swing low & 23.6% Fibonacci retracement of the entire up move from 26 Dec 2018 low to 21 Mar 2019 high).

However, a clearance above 2875 invalidates the bearish scenario for a further squeeze up to retest the current all-time high area of 2940.

Nikkei 225 – 21880 remains the key resistance to watch



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Key Levels (1 to 3 weeks)

Pivot (key resistance): 21880

Supports: 20900 (trigger) & 20200

Next resistance: 22800/23050 (long-term pivot)

Medium-term (1 to 3 weeks) Outlook

Last week, the Japan 225 Index (proxy for the Nikkei 225 futures) has managed to hold the 20900 downside trigger level and staged a rebound of close to 4% to print a current intraday high of 21691 in today, 01 Apr Asian session on the back of a stronger than expected China manufacturing PMI for Mar.

Technical elements remain the same where the 21880 key medium-term resistance has not been surpassed. Maintain bearish bias for a potential push down to retest the 20900 downside trigger level and only a break below it opens up scope for a potential multi-week decline to target the next support at 20200 (swing low areas of 17 Jan/09 Feb 2019 & close to 61.8% Fibonacci retracement of the entire up move from 26 Dec 2018 low to 04 Mar 2019 high).

However, a clearance above 21880 shall invalidate the bearish scenario for an extension of the rebound towards 22800 and even the 23050 key long-term pivotal resistance.

Hang Seng – Mix elements



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Key Levels (1 to 3 weeks)

Resistances: 29510/900, 30500/650 & 31270

Supports: 28400 & 27290

Medium-term (1 to 3 weeks) Outlook

In today, 01 Apr Asian session, the Hong Kong 50 Index (proxy for Hang Seng Index futures) has staged a gap up to challenge the 29510 key medium-term range resistance as per highlighted in our previous weekly report.

Mix elements at this juncture, thus we maintain the neutrality stance between 29510/900 and 28400 (last week low). Bears need to have a break below 28400 to reinforce a potential multi-week decline towards to target 27290 in the first step. On the flipside, a clearance with a daily close above 29900 opens up scope for an impulsive up move to target the next intermediate resistances at 30500/650 and 31270 (Fibonacci expansion clusters as per highlighted on the 4-hour chart).

ASX 200 – 6290 is the key resistance to watch



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Key Levels (1 to 3 weeks)

Intermediate resistance: 6230

Pivot (key resistance): 6290

Supports: 6095 (trigger) & 5920

Next resistance: 6380

Medium-term (1 to 3 weeks) Outlook

After its recent slide of 3% from the 6290 swing high area of 06 Mar 2019 to last week low of 6095, the Australia 200 Index (proxy for the ASX 200 futures) has traded in a sideways range. No clear signs of a resurgence of medium-term upside momentum of price action as the daily RSI oscillator remains below a significant corresponding resistance at the 60 level.

No change, we maintain the bearish bias with 6290 as the key medium-term pivotal resistance and added 6095 as the downside trigger level. A break below 6095 reinforces a potential decline to target the next support at 5920 (former swing high areas of 07 Nov 2018/18 Jan 2019 & the 38.2% Fibonacci retracement of the entire rebound from 23 Dec 2018 low to 06 Mar 2019 high).

However, a clearance with a daily close above 6290 invalidates the bearish scenario for squeeze up towards 6380 (17 Aug 2018 major swing high & 52-week high).

DAX – 11800 is the key resistance to watch

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Key Levels (1 to 3 weeks)

Intermediate resistance: 11650

Pivot (key resistance): 11800

Supports: 11260 (trigger) & 10940/860

Next resistance: 12100 (upper limit of long-term pivot)

Medium-term (1 to 3 weeks) Outlook

The Germany 30 Index (proxy for the DAX futures) has shaped the expected bounce towards the 11500 resistance as per highlighted in our previous weekly outlook report. In today, 01 Apr Asian session, it has staged a gap up to print a current intraday high of 11649 which coincides with the former ascending trendline support from 26 Dec 2018 low now acting as a pull-back resistance at 11650 and close to the 61.8% Fibonacci retracement of the recent slide from 19 Mar 2019 high to 25 Mar 2019 low.

No major changes on its key technical elements, we maintain the bearish bias and adjusted the key pivotal resistance for this week to 11800 due to the risk of a higher volatility in price movement (the recent 19 Mar 2019 swing high where the on-going rebound has been stalled & the former neckline support of the major “Head & Shoulders” bearish reversal configuration) for a potential drop to retest 11260. Bears need to have a break below 11260 to kickstart a potential multi-week decline to target the next support at 10940/860 (50% Fibonacci retracement of the entire up move from 26 Dec 2018 low to 04 Mar 2019 high & minor swing low areas of 17 Jan/08 Feb 2019).

However, a clearance above 11800 invalidates the bearish scenario for a further squeeze up towards the upper limit of the long-term pivotal resistance at 12100.

Charts are from City Index Advantage TraderPro & eSignal





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