Weekly Technical Outlook on Major Stock Indices 26 Feb to 02 Mar 2018

S&P 500 – Broke above 2745, further potential upside ahead

Key Levels (1 to 3 weeks)

Intermediate support: 2725

Pivot (key support): 2690/83

Resistances: 2800/810 & 2877/80

Next support: 2540/30

Medium-term (1 to 3 weeks) Outlook

Last week, the U.S. SP 500 Index (proxy for the S&P 500 futures) continued its recovery process that started 2.5 weeks ago where it manged to hold above the 2540/30 major support zone. On Fri, 23 Feb, it staged a bullish breakout above the 2745 upside trigger as expected (61.8% Fibonacci retracement of the recent steep decline from the current all-time of 29 Jan 2018 to 05 Feb 2018 U.S. session low) and recorded a daily close above 2745 on last Fri. Click here for a recap on our previous weekly technical outlook.

Key technical elements remain positive as follow;

• Last Fri, 23 Feb bullish breakout above 2745 ended with a closing level above 2745 as well as a daily bullish “Marubozu’ candlestick pattern that was seen on the cash S&P 500 index. Interestingly, it was formed right after a prior day “Inverted Hammer” candlestick on Thurs, 22 Feb. These observations represent positive sentiment in favour of the bulls after a pull-back from 16 Feb 2018 high.
• Sector rotation analysis also advocates further potential upside for the Index. The high beta Technology sector which also has the highest sector weightage in the S&P 500 (aprrox.26%) has started to outperform the S&P500 as seen from its relative strength chart (based on the respective ETFs; XLK versus SPY) (refer to the 3rd chart).
• The key medium-term support now rests at 2690/83 (22 Feb 2018 swing low, a Fibonacci cluster & the pull-back support of the former descending resistance from 29 Jan 2018 high) (see 4 hour chart).

Therefore as long as the 2690/83 tightened key medium-term pivotal support holds, the Index is likely to see a further potential up move target the next resistances of 2800/810 (former minor swing low area of 01 Feb 2018) follow by its current all-time high zone of 2877/80 in the first step.

On the other hand, failure to hold above 2683 should jeopardise the recovery scenario for a decline to retest the 2540/30 major support zone.

Nikkei 225 – Recovery process remains intact

Key Levels (1 to 3 weeks)

Intermediate support: 21850

Pivot (key support): 21570

Resistances: 22800/23000 (upside trigger), 24200 & 24540 

Next support: 20800/600

Medium-term (1 to 3 weeks) Outlook

The Japan 225 Index (proxy for the Nikkei 225 futures) had continued to inch higher from the key 20800/600 major support zone (up 8% so far as at 26 Feb current intraday high of 22249). Technical elements remain positive.

• The Index has staged a bullish breakout above its minor descending resistance from 23 Jan 2018 high now turns pull-back support at 21850 which also confluences with a minor ascending trendline from 09 Feb 2018 U.S. session low (see 4 hour chart).
• The key medium-term support now rests at 21570 (former congestion area from 07 Feb to 22 Feb 2018 & the 38.2% Fibonacci retracement of the on-going recovery from 09 Feb 2018 U.S. session low to 26 Feb current intraday high) (see 4 hourt).
• The daily RSI oscillator has continued to inch high and it is now attempting to break above the 50% level which suggests a revival of medium–term upside momentum.

Therefore, we maintain the bullish bias above the tightened key medium-term pivotal support now at 21570 for a further potential push up towards the 22800/23000 upside trigger (the 61.8% Fibonacci retracement of the decline from 23 Jan high to 09 Feb 2018 low & former range top from 09 Nov/18 Dec 201). A daily close above it opens up scope for a further upleg to retest its recent 20-year high of 24200 in the first step.

However, failure to hold above 21570 should negate the recovery process for a deeper slide to retest the 20800/600 major support zone.

Hang Seng – Further potential upside through bullish break

Key Levels (1 to 3 weeks)

Intermediate support: 31150

Pivot (key support): 30070

Resistances: 31800/32000 & 33430/530

Next support: 29070

Medium-term (1 to 3 weeks) Outlook

Last week, Hong Kong 50 Index (proxy for Hang Seng Index futures) had managed to stage a bullish breakout above its former descending resistance from 29 Jan 2018 high and a retest before it reversed up on last Fri, 23 Feb.

• The Index has started to evolve within an ascending channel in place since 09 Feb 2018 low and the lower boundary of the ascending is now acting as a support at around 31150 (see 4 hour chart).
• The key medium-term support now rests at 30070 which is defined by the former minor swing high area of 13 Feb 2018 and the 61.8% Fibonacci retracement of the on-going up move from 09 Feb 2018 low to 21 Feb 2018 high (see 4 hour chart).
• The daily RSI oscillator has continued to hover above the 50% level which indicates the medium-term upside momentum of price action remains intact.

Therefore as long as the 30070 key medium-term pivotal support holds, the Index is likely to see a further potential push up towards 31800/32000 (61.8% Fibonacci retracement of the decline from 29 Jan 2018 high to 09 Feb 2018 low & the gapped down formed on 06 Feb 2018) and above it reinforces an up move to retest the its current all-time high area of 33430/530 in the first step.

However, a break below 30070 support should negate the bullish tone for a slide to retest the 09 Feb 2018 swing low area of 29070.

ASX 200 – Bullish breakout above 5990 trigger level

Key Levels (1 to 3 weeks)

Intermediate support: 5980

Pivot (key support): 5950/30

Resistances: 6150/180 & 6350

Next support: 5780/670

Medium-term (1 to 3 weeks) Outlook

The Australia 200 Index (proxy for the ASX 200 futures) had managed to stage a bullish breakout above the 5990 upside trigger level and a daily close above it on last Fri, 24 Feb U.S. session.

Technical elements remain positive, thus we maintain the bullish bias above a tightened key medium-term pivotal support now at 5950/30 (close to 23.6% Fibonacci retracement of the on-going up move from 09 Feb 2018 U.S. session low & the former minor swing high areas of 07 Feb/19 Feb 2018) for further potential up move to retest the 09 Jan 2018 swing high area of 6150/180 in the first step. A break above 6180 opens up scope for further potential rally towards 6350 (Fibonacci projection cluster).

On the other hand, a break below 5950/30 should negate the bullish tone for a slide back to retest the 5780/670 major support zone.

DAX – 12845 remains the upside trigger

Key Levels (1 to 3 weeks)

Intermediate support: 12370/280

Pivot (key support): 11900/800

Resistances: 12845 (upside trigger), 13140 & 13560

Next support: 10800

Medium-term (1 to 3 weeks) Outlook

Technical elements remain the same. The Index still needs to have a bullish break above the 12845 upside trigger (61.8% Fibonacci retracement of the steep decline from 23 Jan 2018 high to 06 Feb 2018 low & the former range support from 15 Nov 2017 low) to reinforce a further potential up move towards towards the next resistance at 13140 (76.4% Fibonacci retracement of the steep decline from 23 Jan 2018 high to 06 Feb 2018 low) follow by the current all-time high area of 13560.

On the other hand, failure to hold above 11900/800 should invalidate the recovery scenario to open up scope a multi-month corrective down move to test the next support at 10800 in the first step.

Charts are from City Index Advantage TraderPro  & eSignal