US equities are set to open lower as markets worry about political turmoil in Italy. The week has started with risk off sentiment in Europe due to the potential of an Italian election within a few months which could result in a win for populist parties that could lead to Italy leaving the Euro. However, on a positive note, President Trump announced on Friday that dialogue has restarted with North Korea suggesting that a meeting between the two countries could even take place on the originally scheduled date. This morning, President Trump tweeted progress in the talks. In the week ahead, attention will turn to important economic data including GDP on Wednesday followed by the Non-Farm Employment Change on Friday.
On the daily chart, the S&P500 (SPX) has been trading in a range between 2740 and 2703 for a number of days. A break of 2703 level opens the door to further downside with support at 2680 and then 2663. However, if the index can remain above 2703, immediate upside resistance is at 2715 and a break of 2740 is needed for a continuation towards 2760 and then 2785.
On the daily chart, the Nasdaq 100 (NDX) index is finding strong resistance at the psychologically important 7000 level. A break of 7000 will be needed for a continued advance to resistance at 7090 followed by the all time highs. However, a reversal and break of support at 6870 will signal a double top and likely open the way for declines to 6780 followed by the 50% retracement at 6720.