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FxPro Forex Analysis: S&P 500 and Nasdaq 100 Analysis – May 14, 2018


The major US equity indices all rose more than 2% last week, driven by buybacks and improving earnings growth. A pullback in US treasury yields and the Dollar Index also contributed to gains last week, as higher treasury yields can reduce investment in stocks with a stronger currency, making exports more costly. A continuation of these trends could help support equities over the coming weeks.

For today, the bullish sentiment in stocks is being helped by the easing of US-China tensions after President Donald Trump tweeted Sunday that it “will all work out” on U.S.-China trade. Also, the US earnings season winds down this week, with most of the reports from retailers coming on Wednesday and Thursday, led by Macys and Walmart respectively.

S&P 500

On the 4-hourly chart, the S&P500 (SPX) broke out to the upside from the January trend line and is trading in an ascending wedge. A break of 2740 would open the way for further gains towards 2800, with resistance at 2762. After such a sharp rally, a period of consolidation or a retracement would not be a surprise. A break of the wedge could see a decline with support at 2716, followed by the 50% retracement of the rally from May 8 at 2695.

Nasdaq 100

On the daily chart, the Nasdaq 100 (NDX) has traded to the upside in an ascending wedge towards the 7000 level. A break of 7000 would open the possibility of the index attempting a new all-time high. However, a reversal and break of the wedge could see a retracement towards the 23.6% Fibonacci and horizontal support at 6870, followed by 6780.

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