Weekly Technical Outlook on Major Stock Indices 17 Sep to 21 Sep 2018

Stock indices remain below resistances with trade tensions fail to abate.

S&P 500 – Remains in a potential toppish configuration





Key Levels (1 to 3 weeks)

Intermediate resistance: 2914

Pivot (key resistance): 2940

Supports: 2860 (trigger) & 2790

Next resistance: 2990/3000

Medium-term (1 to 3 weeks) Outlook

Last week, the SP 500 Index (proxy for the S&P 500 futures) had continued to grind higher but did not surpass the key long-term pivotal resistance of 2940. Sector rotation analysis still shows signs of weakness in the current up move of the S&P 500 since the bullish breakout from its 3-month range on 12 Jul 2018. Only two “risk -on” sensitive sectors; Technology (XLK) and Consumer Discretionary (XLY) are holding the fort in terms of outperformance against the S&P 500 (refer to 3rd & 4th charts). Click here for a recap on our previous weekly outlook.

Therefore, no change in our directional view with 2940 remains the pivotal resistance and bears need to have a break below 2860 to unleash the potential first impulsive downleg to target the next support at 2790 (the former resistance of the 3-month range configuration from 12 Mar 2018 & ascending trendline from 02 Apr 2018 low).

However, a clearance above 2940 shall see an extension of the blow off move to target the next resistance at 2990/3000 (Fibonacci projection cluster & psychological).

Nikkei 225 – Tolerate range resistance excess to 23420



Key Levels (1 to 3 weeks)

Pivot (key resistance): 23420

Supports: 23000 (trigger), 22240 & 21850

Next resistance: 24200/540

Medium-term (1 to 3 weeks) Outlook

Last week, the Japan 225 Index (proxy for the Nikkei 225 futures) had breached above the 23000/23050 range resistance in place since 21 May 2018 but the breakout is not convincing as the daily RSI oscillator (momentum indicator) has not broken above its corresponding resistance at the 60 level.

Therefore, we tolerate the excess of the breach to 23420 (the intraday high of 09 Nov 2017 & also close to the 76.4% Fibonacci retracement of the decline from 23 Jan 2018 high to 23 Mar 2018 low). The bears need to break below 23000 to invalidate last week’s bullish break for a decline back into its 3-month range configuration to target the 22240 support in the first step (the ascending trendline from 05 Jul 2018 low).

On the flipside, a daily close above 23420 sees a continuation of the up move to retest the 24200/540 swing high area formed on 17/24 Jan 2018, a 26-year high since Oct 1991.

Hang Seng – Further potential down move ahead

Key Levels (1 to 3 weeks)

Intermediate resistance: 27260/580

Pivot (key resistance): 28000

Supports: 25640/500 & 24740

Next resistances: 29100 & 30100

Medium-term (1 to 3 weeks) Outlook

Last week, the Hong Kong 50 Index (proxy for Hang Seng Index futures) had indeed shaped the expected corrective push up to target the 27260/580 intermediate resistance (50%/61.8% Fibonacci retracement of the recent decline from 28 Aug 2018 high to 11 Sep 2018 low of 26066) before it stalled and did a minor reversal to print a current intraday low of 26765 as at 17 Sep.

No change, we maintain the bearish bias below the key medium-term pivotal resistance now at 28000 (the pull-back resistance of the former major ascending support from Feb 2016 low & the upper boundary of the medium-term descending channel from 07 Jun 2018) for a further potential down move to target the next support at 25640/500 (Fibonacci projection cluster & swing low area of 05 Jul 2017). A break below 25500 sees a potential downside acceleration towards the 24740 support (the lower boundary of the medium-term descending channel in place since 07 Jun 2018 & Fibonacci projection cluster).

ASX 200 – Evolving within a bearish flag configuration



Key Levels (1 to 3 weeks)

Intermediate resistance: 6200

Pivot (key resistance): 6250

Supports: 6100 & 5980

Next resistance: 6350/80

Medium-term (1 to 3 weeks) Outlook

No major changes on its technical elements for the Australia 200 Index (proxy for the ASX 200 futures) as it continued to undergo a corrective rebound (in the form of a “bearish flag) since its recent 6100 low printed on 07 Sep 2018.

6250 remains the key medium-term pivotal resistance (the pull-back resistance of the former “Expanding Wedge” range support & 50% Fibonacci retracement of the recent decline from 30 Aug 2018 high to 07 Sep 2018 low) for a for another potential downleg to retest 6100 before targeting the major support at 5980 (the lower boundary of the ascending channel in place since 10 Feb 2016 low).

On the other hand, a clearance above 6250 negates the bearish view for a squeeze up to retest 6350/80.

DAX – Recent push up losing momentum



Key Levels (1 to 3 weeks)

Intermediate resistance: 12125/140

Pivot (key resistance): 12540

Supports: 11800 (downside trigger), 11550 & 11400

Next resistance: 12890

Medium-term (1 to 3 weeks) Outlook

Last week, the Germany 30 Index (proxy for the DAX futures) had stage the expected push up to towards the 12125/140 intermediate resistance. Interestingly, the shorter-term 4 hour Stochastic oscillator has reached an extreme overbought level of 94 and flashed a bearish divergence signal. These observations suggest that the momentum of the recent push from its 11862 low printed on 11 Sep 2018 has started to abate where the Index may stage a bearish reversal.

Therefore, we maintain the bearish view with 12540 remains as the key medium-term pivotal resistance (also the upper boundary of the medium-term descending channel in place since 14 Jun 2018) and a daily close below 11800 (the neckline support of the impending major “Head & Shoulders” bearish reversal configuration in place since 20 Jun 2017) is likely to add impetus for a potential significant multi-month corrective down move to target the next support at 11550 in the first step (the lower boundary of the medium-term descending channel  in place since 14 Jun 2018.

However, a clearance above 12540 negates the bearish tone for another round of choppy movement to retest the 12890 swing high area of 27 Jul 2018.

Charts are from City Index Advantage TraderPro & eSignal








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