Weekly Technical Outlook on Major Stock Indices 07 May to 11 May 2018

S&P 500 – Watch the 2720 upside trigger level

Key Levels (1 to 3 weeks)

Intermediate support: 2657 & 2610

Pivot (key support): 2585

Resistances: 2720 (upside trigger) & 2800

Support: 2540/30 (long-term pivot)

Medium-term (1 to 3 weeks) Outlook

Last Thurs, 03 May 1.6% tumble seen on the SP 500 Index (proxy for the S&P 500 futures) from its high of 2638 had managed to stall right above the 2585 key medium-term support (printed a low of 2593) and reversed up sharply on last Fri, 04 May by 1.33 %. In addition, it ended the week with a bullish weekly “Dragonfly Doji” candlestick pattern. Click here for a recap on our previous weekly technical outlook.

No major changes on its key technical elements as the Index is still evolving inside the 4-month old “Symmetrical Triangle” range in place since its all-time high from 29 Jan 2018. We will like to reiterate that from a technical analysis perspective a major top is not likely in place yet to end the 9-year old bull trend in place since Mar 2009 low. The Index may still stage another round of impulsive upleg within this on-going melt-up phase of the 9-year bull trend in place since Feb 2016 low.

One notable development to note is two key high beta/momentum play sectors (Semiconductors & FANG/Technology) had continued to lead the S&P 500 and displayed positive elements (see 3^rd & 4^th charts) where it is likely that the SP 500 Index may end the on-going 4-month of range consolidation phase soon.

Therefore, we maintain the bullish bias with 2585 remains as the key medium-term pivotal support and a clear break above the upper boundary of the “Symmetrical Triangle” range configuration now acting a resistance 2720 (a daily close above it) is likely to reinforce an up move to target 2800 (the swing high areas of 12/13 Apr 2018) in the first step.

However, a daily close below 2585 negates the rebound scenario for a further decline to retest the 2540/30 major support zone.

Nikkei 225 – 22710 remains the upside trigger

Key Levels (1 to 3 weeks)

Intermediate support: 22330

Pivot (key support): 21915

Resistances: 22710 (upside trigger), 23000/23280 & 23550

Next support: 21000

Medium-term (1 to 3 weeks) Outlook

The Japan 225 Index (proxy for the Nikkei 225 futures) had t below its range resistance of 22510/710 as its cash stock market was mostly closed for last week due to Japanese public holidays (Golden Week).

No major change on its key elements, we maintain the bullish bias with 21915 remains as the key medium-term pivotal support and a and a clear break above 22710 (a daily close above it) is likely to reinforce a further potential recovery to target the next resistances at 23000/23280 (former range top of 09 Nov/18 Dec 2017 & 76.4% Fibonacci retracement of the recent decline from 23 Jan 2018 high to 24 Mar 2018 low) follow by 23550 next.

On the other hand, failure to hold at 21915 shall negate the bullish tone for a deeper slide to retest the former “Descending Wedge” resistance now acting as a pull-back support at around 21000.

Hang Seng – Still stuck within the range configuration

Key Levels (1 to 3 weeks)

Supports: 29070, 28100 & 26000/25750

Resistances: 31800 & 33430/530

Medium-term (1 to 3 weeks) Outlook

No major changes on its key elements as the Hong Kong 50 Index (proxy for Hang Seng Index futures) had continued to trade in choppy sideways configuration below 31800.

We maintain the medium-term neutrality stance between 29070 31800 and 29070. Only a clear break (a daily close) above the 31800 significant range top (a failure bullish breakout occurred on 21 Mar) in place since 27 Feb 2018 opens up scope for a potential rally to retest its current all-time high area of 33430/530 in the first step.

On the flipside, a break below 29070 should see a further decline towards the next support at 28100 (the swing low areas of 25 Oct/07 Dec 2017 & the former major swing high area of mid-May 2015).

ASX 200 – Bullish breakout from range configuration

Key Levels (1 to 3 weeks)

Intermediate support: 6054

Pivot (key support): 5995

Resistances: 6150 & 6280

Next supports: 5850

Medium-term (1 to 3 weeks) Outlook

Last week, the Australia 200 Index (proxy for the ASX 200 futures) has staged a bullish breakout from its former “Symmetrical Triangle” range resistance in place since 09 Jan 2018 high and it is now coming close to the resistance/target of 6150 (printed a high of 6118 on 04 May, U.S. session).

We maintain the bullish with an adjusted key medium-term pivotal support now at 5995 (the pull-back support of the former “Symmetrical Triangle” range resistance & close to the 23.6% Fibonacci retracement of the on-going up move from 04 Apr 2018 low to last Fri, 04 May U.S. session high) for a further potential upleg to target 6150 before the next resistance at 6280 (upper boundary of minor ascending channel from 25 Apr 2018 low & 1.618 Fibonacci projection of the up move from 04 Apr low to 24 Apr high projected from 25 Apr 2018 low – see 4 hour chart).

On the flipside, failure to hold above 5995 is likely to see a failure bullish breakout for another round of choppy decline to reintegrate back in the 4-month range configuration with next support coming in at 5850 (the congestion area of 27 Mar/20 Apr 2018 & the 61.8% Fibonacci retracement of the up move from 04 Apr 2018 low to last Fri, 04 May U.S. session high.

DAX –  Breaking above 12850

Key Levels (1 to 3 weeks)

Intermediate support: 12630

Pivot (key support): 12300

Resistances: 12850 (upside trigger), 13140/150 & 13560

Next support: 11900/800 (major support)

Medium-term (1 to 3 weeks) Outlook

The Germany 30 Index (proxy for the DAX futures) had pushed up higher as expected and it is now testing the 12850 upside trigger level (see daily chart).

We maintain the bullish bias with an adjusted key medium-term pivotal support now at 12300 (50% Fibonacci retracement of the on-going up move from 26 Mar 2018 low to 07 May 2018 current intraday high of 12889 & the minor swing low area of 25 Apr 2018) and a daily close above 12850 is likely to reinforce a further potential up move to target the next resistance at 13140/150 before the all-time area of 13560.

However, failure to hold at 12300 negates the bullish tone for another round of choppy decline to retest the major support zone of 11900/800 (the primary ascending trendline from Feb 2016 low).

Charts are from City Index Advantage TraderPro & eSignal