In the year-end holiday shortened week, US equity indices namely Dow Jones and S&P 500 managed to scale new all-time highs, but Nasdaq 100 failed to do so. During the last two trading sessions of 2014 all the major US equity indices slipped into the red. Now on the first trading session of 2015, indices futures are pointing towards a mild recovery at the opening.
Given the backdrop, here is a technical overview for the important US equity indices - Dow Jones Industrial Average, S&P 500 and Nasdaq 100.
Dow Jones [DJI30]
Even as the index moved above 18,000 mark, climbing to new intraday highs, it failed to sustain its strength at higher levels. Moreover, technical oscillator, RSI, failed rise along with the price thus indicating the occurrence of a possible bearish divergence. Hence, considering a reversal from key resistance area and a possible bearish divergence suggests weakening momentum and increased possibilities of continuation of the corrective move initially towards 17,600-580 intermediate horizontal support and eventually towards 100-day SMA support, currently near 17,200 region. However, a decisive break 18,000 mark resistance might now strengthen the momentum towards 18,400 resistance area, marked by the upper trend-line resistance of a long-term ascending channel formation on weekly chart.
S&P 500 [SP500]
The index once again reversed from the upper trend-line resistance of a well-established ascending trend-channel formation on weekly chart. From current levels, the index seems more likely to extend the corrective pull-back, initially towards 2010-2000 psychological mark support, which if broken further towards its next important support near 1965-60 area. Alternatively, resumption of the upward trajectory, leading to a decisive strength above 2100 important resistance would signal a break-out, opening room for continuation of the up-trend immediately towards 2130-35 resistance area, marked by 61.8% Fib. expansion level.
Nasdaq 100 [NQ100]
The index seems to have formed a bearish reversal chart pattern, Double-Top, near 4320-30 area and now seems to be heading towards testing sub-4200 immediate support level, marking 23.6% Fib. retracement level of Oct.-Nov. 2014 upswing. Moreover, a decisive break below 23.6% Fib. retracement level seems to exert additional near-term pressure on the index, taking it back towards testing a very important support confluence near 4100 region, comprising of 100-day SMA and 38.2% Fib. retracement level. Furthermore, break below this important support confluence could possibly confirm the bearish reversal Double-Top chart pattern, suggesting continuation of weakening trend towards 3940-30 support area, also coinciding with 61.8% Fib. retracement level. Intermediate downside support is pegged at 50% Fib. retracement level near 4000 round figure mark. Meanwhile on the upside, 4280-90 area now seems to act as immediate resistance but strong upside resistance remains near 4320-30 zone. An upside break above this important support is likely to extend the momentum towards the next round figure mark resistance at 4400.
Senior Market Analyst
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