Weekly Technical Outlook on Major Stock Indices 30 Apr to 04 May 2018

Light at the end of a 3-month choppy range for stock indices; watch 2740 on the S&P 500

S&P 500 – Bulls need to break above 2740

Key Levels (1 to 3 weeks)

Intermediate support: 2612

Pivot (key support): 2585

Resistances: 2720/40 (upside trigger) & 2800

Support: 2540/30 (long-term pivot)

Medium-term (1 to 3 weeks) Outlook

In the first half of last week, the SP 500 Index (proxy for the S&P 500 futures) had tumbled by 2.8% to print a low of 2612 on Wed, 25 Apr as the market grappled with fears of an earnings slowdown in semiconductors firms, a weak earnings guidance from Apple, a bellwether stock in both S&P 500 and Nasdaq 100 that will report its fiscal Q2 earnings on this Tues, 01 May after the close of the U.S. cash stock market and the 10 year U.S. Treasury yield that probed above the 3% key resistance for the first time since January 2014.

The initial decline of the Index did not break below the 2585 key medium-term pivotal key support and managed to stage a minor reversal at ended the week with a positive close at 2672 that almost erased the initial losses seen at the first half of last week. Click here for a recap on our previous weekly technical outlook. Current key elements are as follow;

  • The Index is still undergoing a 4-month long of consolidation phase in the form of a “Symmetrical Triangle” range since its all-time high from 29 Jan 2018 within a melt-up phase.  Elliot Wave/fractal analysis suggests that last week’s push up from 2612 low is likely a wave d/ of a typical 5 wave structure triangle range configuration with its potential end target/resistance at 2720/40 before the risk of another choppy wave e/ downleg materialises for a potential completion of the “Symmetrical Triangle” range configuration. The lower limit/support of the “Symmetrical Triangle” remains at 2585 which also coincides with a Fibonacci projection/retracement cluster) (see 4 hour chart of the Index).
  • Despite negative sentiment as per highlighted on most media coverages on Technology and semiconductor stocks, the relative strength chart of the S&P Technology sector ETF (XLK) versus the S&P 500 has managed to hold above its support. In addition, the initial decline seen at the start of last week for the Semiconductor sector ETF (SOXX) has managed to stall right above its key major support of 163.00 and ended the week with a bullish “Hammer” candlestick pattern. These observations suggest a potential change in price action sentiment from negative to positive (refer to the 3rd & 4th charts).

Therefore, we expect the Index to shape initial push up to test the 2720/40 resistance (the upper limit of the “Symmetrical Triangle” range before another the risk of another choppy downleg materialises to retest last week low of 2612.  As long as the 2585 key medium-term pivotal support holds, the Index may see the start of an impulsive upleg structure of the melt-up phase and break above 2740 reinforces an up move to target 2800 (the swing high areas of 12/13 Apr 2018) in the first step.

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

Nikkei 225 – 22510/710 remains the upside trigger

Key Levels (1 to 3 weeks)

Intermediate support: 22330

Pivot (key support): 21915

Resistances: 22510/710 (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 continued to inch higher as expected to probe the 22510/710 upside trigger level.

No major changes on its key elements, we maintain the bullish bias with an adjusted key medium-term pivotal support shifted up to 21915 (the former swing high areas of 12 Mar & 05/10/16 Apr 2018 & close to the 23.6% Fibonacci retracement of the on-going up move from 24 Mar 2018 low to last Fri, 27 Apr U.S session high of 22557) and a clear break above 22710 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.

However, 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 21000.

Hang Seng – Bulls need to break above 31800 range resistance

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 – 6030 is the upside trigger to watch

Key Levels (1 to 3 weeks)

Intermediate support: 5924

Pivot (key support): 5850

Resistances: 6000/6030 (upside trigger) & 6150

Next supports: 5750/700

Medium-term (1 to 3 weeks) Outlook

The Australia 200 Index (proxy for the ASX 200 futures) had continued to push higher as expected and it is now coming close to the lower limit of the 6000/6030 medium-term resistance/upside target as per highlighted in last week report (printed a current intraday high of 5993 in today, 30 Apr Asian session).

An important point to note that the 6000/6030 is the upper boundary/resistance of the “Symmetrical Triangle” range consolidation in place since 09 Jan 2018 high and interestingly, the daily RSI oscillator has flashed out a bullish presignal at it has staged a bullish breakout from its parallel resistance at the 60% level. These observations suggest a revival of medium-term upside momentum.

We maintain the bullish with an adjusted key medium-term pivotal support now at 5850 and a clear break above 6030 is likely to reinforce a further potential recovery towards the 09 Jan 2018 swing high area of 6150.

On the flipside, failure to hold at 5850 negates the bullish tone for a deeper slide to retest the “Symmetrical Triangle” range support at 5750/700.

DAX –  Bulls need to break above 12750/850

Key Levels (1 to 3 weeks)

Intermediate support: 12310

Pivot (key support): 12120

Resistances: 12750/850 (upside trigger) & 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 a choppy price action last week as it failed to break above the 14/18 Apr weekly high of 12640.

No major changes on its key elements as the 12750/850 remains the “line in the sand” for the bulls (the former range support from 15 Nov 2017/02 Jan 2018 that led to a push up to its current all-time high level of 13600 & the 61.8% Fibonacci retracement of the steep decline seen from its 23 Jan 2018 all-time high to 06 Feb 2018 low). We maintain the bullish bias with 12120 as the key medium-term pivotal support and a clear break above 12750/850 is likely to reinforce the potential start of a an impulsive upleg structure within its melt-up phase to target the next resistance at 13140/150 in the first step.   

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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