Weekly Technical Outlook on Major Stock Indices 08 Apr to 12 Apr 2019

Key Levels (1 to 3 weeks)

Intermediate support: 2855

Pivot (key support): 2818

Resistances: 2940 & 2951

Next support: 2730

Medium-term (1 to 3 weeks) Outlook

Last week, the SP 500 Index (proxy for the S&P 500 futures) has surged passed above the 2875 (excess) long-term pivotal resistance with a weekly close above it. The longer-term (multi-month) bearish view as per highlighted in our Q1 2019 Global Markets Technical Outlook has been invalidated.

In addition, relative strength analysis of the 5 key high beta indices/sectors have indicated more follow-through on outperformance against the S&P 500 last week by the Semiconductors sector (SOXX) and NYSE FAANG+ Index after the Nasdaq 100 has taken the lead 2 weeks ago.

Therefore, the SP 500 Index is now undergoing a potential multi-month impulsive wave structure that may see a new all-time high in the coming weeks ahead. For this week, we have a bullish bias where the Index may see a minor pull-back first (due to the an extreme overbought level seen in the shorter-term 4-hour Stochastic oscillator) towards the 2855 intermediate support with a maximum limit set at the 2818 weekly pivotal support (former swing high areas of 17 Oct/07 Nov 2018  high & close to the lower boundary of minor ascending channel from 08 Mar 2019 minor low) before another potential upleg materialises to target the 2940 current all-time high level and even 2951 next (1.00 Fibonacci expansion of the up move from 26 Dec 2018 swing low area to 18 Jan 2019 high projected from 23 Jan 2019 low).

On the other hand, failure to hold at 2818 negates the bullish tone for a deeper pull-back towards the 2730 support. 

Key Levels (1 to 3 weeks)

Resistances: 21880, 22800 & 23050 (long-term pivot)

Supports: 20900 & 20200

Medium-term (1 to 3 weeks) Outlook

The Japan 225 Index (proxy for the Nikkei 225 futures) has tested the 21880 key medium-term pivotal resistance again but it has not managed to clear bullish breakout with a daily close above it.

Mix elements and given the bullish configurations seen in the other major indices (S&P 500, DAX & Hang Seng), our initial medium-term (multi-week) bearish view has been tempered. Thus, prefer to turn neutral at this juncture between 21880 and 20900. Only a break below 20900 triggers 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).

On the flipside, a clearance above 21880 opens up scope for further up move towards 22800 and even the 23050 key long-term pivotal resistance.

Hang Seng – Minor pull-back before new upleg

Key Levels (1 to 3 weeks)

Intermediate support: 29500

Pivot (key support): 28790

Resistances: 30500/650 & 31270

Next support: 27290

Medium-term (1 to 3 weeks) Outlook

Last week, the Hong Kong 50 Index (proxy for Hang Seng Index futures) has surged above the 29900 (excess) long-term pivotal resistance with a weekly close above it. The longer-term (multi-month) bearish view as per highlighted in our Q1 2019 Global Markets Technical Outlook has been invalidated.

For this week, we turn bullish from a neutrality stance with a key pivotal support at 28790 (the lower boundary of a medium-term ascending channel from 03 Jan 2019 low & Fibonacci retracement cluster) where the Index may see a minor pull-back first towards 29500 intermediate support before a new potential upleg materials to target the next resistances at 30500/650 & 31270 (Fibonacci expansion levels & upper boundary of the medium-term ascending channel from 03 Jan 2019 low).

On the other hand, failure to hold at 28790 negates the bullish tone for a deeper pull-back towards the next support at 27290.  

ASX 200 – 6290 remains the key resistance to watch

Key Levels (1 to 3 weeks)

Pivot (key resistance): 6290

Supports: 6095 (trigger) & 5940/20

Next resistance: 6380

Medium-term (1 to 3 weeks) Outlook

Last week, the Australia 200 Index (proxy for the ASX 200 futures) has underperformed against the rest of the major stock indices (S&P 500, Hang Seng & DAX) that we track as it inched down by 1.8% from the 6290 key medium-term pivotal resistance to print a low of 6168 on last Fri, 05 Apr.

The Index has now started to trace out a potential bearish reversal “Double Top” configuration with its neckline support at 6095. Given the on-going strength seen in the rest of the major stock indices, we turn neutral first at this juncture between 6290 and 6095. Only a daily close below 6095 opens up scope for a further potential decline to target the next support at 5940/20 in the first step (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).

On the flipside, a clearance with a daily close above 6290 see a further squeeze up towards 6380 (17 Aug 2018 major swing high & 52-week high).

DAX – Minor pull-back before new upleg

Key Levels (1 to 3 weeks)

Intermediate support: 11800

Pivot (key support):11700

Resistances 12100 & 12350/450

Next support: 11270

Medium-term (1 to 3 weeks) Outlook

Last week, the Germany 30 Index (proxy for the DAX futures) has surged by 3.5% to reintegrate back above the neckline of major bearish reversal “Head & Shoulders” configuration at 11800. Also, it has been the best performer among the major stock indices since the start of last week.

Given that daily RSI oscillator that has reached its overbought region coupled with the shorter-term 4-hour Stochastic oscillator that has inched down from its extreme overbought level, the Index may now shape a minor pull-back first towards 11800/700 support zone before another potential upleg materialises to target the upper limit of the long-term pivotal resistance at 12100 (also the major descending trendline from 23 Jan 2018 high).  

On the other hand, failure to hold at the 11700 key medium-term pivotal support set for this week negates the bullish tone for a deeper pull-back towards the next support at 11270 (25 Mar 2019 swing low area & 38.2% Fibonacci retracement of the up move from 26 Dec 2018 low to 04 Apr 2019 high).    

Charts are from City Index Advantage TraderPro & eSignal