Weekly Technical Outlook on Major Stock Indices 23 Apr to 27 Apr 2018

S&P 500 is still holding above support despite last week onslaught by the bears on Apple and semiconductor stocks.

S&P 500 – Further potential push up within range configuration

Key Levels (1 to 3 weeks)

Intermediate support: 2670

Pivot (key support): 2585

Resistances: 2740/50 & 2800

Support: 2540/30 (long-term pivot)

Medium-term (1 to 3 weeks) Outlook

The U.S. SP 500 Index (proxy for the S&P 500 futures) had managed to stage the expected bullish breakout from the 2680/70 (former range resistance from 27 Mar/05 Apr 2018) at the earlier part of last week on 17 Apr to print a high of 2718 on 18 Apr (22 points away from our target/resistance of 2740). Click here for a recap on our previous weekly technical outlook.

Thereafter, it could not maintain its upside momentum and started to slide reinforced by a negative revenue guidance from the world largest semiconductor chipmaker, TSMC due to weaker forecasted demand from smartphones. This revenue warning created a negative feedback loop into U.S. semiconductor stocks and the bellwether Apple (the highest weightage stock in the S&P 500 at 3.8%) which is a significant customer of TSMC.  Key technical elements have not turned bearish for the Index.

  • Last week’ decline of 2% from its high of 2718 has stalled a significant intermediate support of 2670 which is defined by a confluence of elements. The former minor range resistance from 27 Mar/05 Apr 2018, the minor ascending trendline support from 03 Apr 2018 low and the 38.2% Fibonacci retracement of the recent up move from 07 Apr low to 18 Apr 2018 high (see 4 hour chart).
  • The 4 hour Stochastic oscillator has also flashed a bullish divergence signal at its oversold region which indicates a slowdown in the recent downside momentum of price action.
  • Last week’s decline seen in the S&P 500 has been triggered by semiconductor related stocks and the U.S. Semiconductor Sector index (taking the SOXX ETF) as a proxy is now right above the “Expanding Wedge” range support of 170.77 coupled with the daily RSI that is hovering right at a significant corresponding support at the 40% level. These observations suggest the Semiconductor Sector (SOXX) may stage a rebound at this juncture that can reverse last week’s negative sentiment on the S&P 500.

Therefore, we maintain the bullish bias with 2585 remains as the key medium-term pivotal support for another attempt to stage a potential push up to test the upper boundary/resistance of the “Symmetrical Triangle” range at 2740/50.  A break above 2450  sees a bullish breakout from the “Symmetrical Triangle” range to open scope for a further up move to target 2800 next (the minor swing high areas of  12/13 Mar 2018).

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

Nikkei 225 – Bulls need to have a break above 22510 to gain momentum

Key Levels (1 to 3 weeks)

Intermediate support: 21970

Pivot (key support): 21300

Resistances: 22510 & 22300/23280

Next supports: 20800 & 20550

Medium-term (1 to 3 weeks) Outlook

The Japan 225 Index (proxy for the Nikkei 225 futures) had managed to stage the expected push up last week before traded sideways after a high of 22359 seen on 19 Apr.

No major changes on its key elements. We maintain the bullish bias with an adjusted key medium-term pivotal support now at 21300 (the swing low of 07 Apr 2018 & the 50% Fibonacci retracement of the on-going up move from 24 Mar 2018 low to last week high of 22359) for a potential up move to target 22510 resistance next (former swing high area of 27 Feb 2018 high) and above it opens up scope for an extension of the up move towards 23000/23280 resistance next (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).

On the other hand, a break below 21300 shall negate the bullish tone for a deeper slide to retest the former “Descending Wedge” resistance now acting as a pull-back support at 20800.

Hang Seng – Still trapped within 31800/29070 range configuration

Key Levels (1 to 3 weeks)

Supports: 29070, 28100 & 26000/25750

Resistances: 31800 & 33430/530

Medium-term (1 to 3 weeks) Outlook

The Hong Kong 50 Index (proxy for Hang Seng Index futures) had continued to trade in choppy sideways configuration as it grappled with a liquidity tightening condition triggered by the Hong Kong central bank (HKMA)’s intervention in the FX market to buy up HKD in order to prevent the USD/HKD to break above the upper limit of the predetermined policy band of 7.85 coupled with weakness seen in Apple related supplier AAC Tech and another technology bellwether stock, Lenovo Group.   

We maintain the medium-term neutrality stance between 29070 31800 and 29070. Only a clear break (a daily close) above the 31800 range top 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 – Further potential push up in progress within “Symmetrical Triangle” range

Key Levels (1 to 3 weeks)

Intermediate support: 5840

Pivot (key support): 5750

Resistances: 5910 & 6000/6030

Next supports: 5660 (downside trigger) & 5500

Medium-term (1 to 3 weeks) Outlook

Last week, the Australia 200 Index (proxy for the ASX 200 futures) had managed to push higher as expected and almost met the intermediate resistance/target of 5910 (printed a high of 5906 on 19 Apr) before it staged a pull-back of around 1% to print a low of 5844 on last Fri, 20 Apr U.S. session.

No major changes on its technical elements. We maintain the bullish bias with an adjusted key-medium-term pivotal support now at 5750 (the lower boundary of the “Symmetrical Triangle” range configuration) and a break above 5910 is likely to reinforce a further potential push up to target the “Symmetrical Triangle” range resistance of 6000/6030.

However, failure to hold 5750 sees a further slide to retest 5660 and only a clear break (a daily close below) 5660 is likely to trigger the start of a multi-month corrective down move to target the next support at 5500 in the first step (the former range resistance of 07 Oct/25 Nov 2016 & close to the 50% Fibonacci retracement of the up move from 10 Feb 2016 low to 09 Jan 2018 high).   

DAX –  Further potential upleg above 12120 support

Key Levels (1 to 3 weeks)

Intermediate support: 12500/460

Pivot (key support): 12120

Resistances: 12750/865 & 13140/150

Next support: 11900/800 (major support)

Medium-term (1 to 3 weeks) Outlook

The Germany 30 Index (proxy for the DAX futures) had continued to push higher and broke above the neckline resistance of a medium-term bullish “Double Bottom” chart reversal configuration in place since 06 Feb 2018 low.

After the Index printed a high of 12640 on 18 Apr, it staged a pull-back to retest the former neckline of the “Double Bottom” now turns pull-back support at 12500/460 in line with weakness seen in the U.S stock market on last Thursday and Friday.

No change on its key elements, we maintain the bullish bias with 12120 as the key medium-term pivotal support (ascending trendline from 26 Mar 2018 low & close to the 50% Fibonacci retracement of the recent up move from 26 Mar low to 18 Apr 2018 high) for another round of potential upleg to target 12750 before next resistance at 13130/150 (the former minor swing low area of 11/17 Jan 2018 & the 76.4% Fibonacci retracement of the recent steep decline from its current all-time high seen on 23 Jan 2018 to 06 Feb 2018 low.

On the other hand, a break below12120 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

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