S&P 500, Nasdaq, Dow Jones call points:
- US equities continue to trade after the withdrawal last week, to varying degrees depending on the index under analysis.
- The Nasdaq 100 keeps bullish breakout potential when Dow Jones shows the chances of the bear breaking. The S&P 500 is somewhat in the middle, viewed below in an apple-apple manner with a set of Fibonacci withdrawals.
- The analysis contained in the article is based on pricing and chart formations. For more information on pricing actions or chart patterns, visit us DailyFX education section.
U.S. stocks continue to be traded, holding on to last week’s sale as concerns over Chinese real estate lender Evergrande. Last week saw four consecutive days of S&P 500 futures trading, with prices rising back yesterday, leading to inflation data this morning.
And for the first time since October last year, the headline CPI was written under the expectation of a monthly reading, with the inflation rate of the MoM being 0.3% compared to the expected 0.4%. On an annual basis, however, expectations were compared with 5.3%, but still show a moderation from 5.4% last month, giving the Federal view that inflation is somewhat temporary.
Only a few months ago, a lower-than-expected consumer price index would probably have been a boon for equities. And about an hour after the CPI was released this morning, it was like US stock futures were being offered at 9.30. However, after stock markets began trading on that day, U.S. stocks returned to recent lows and kept moving there in the morning.
The lack of upward follow-up can be seen in a number of different ways: perhaps there is overwhelming concern for Evergrande and China, and even for the global financial system. Or it could just be tightening before September FOMC interest rate decision, being wary of the Fed starting to tighten plans.
It is likely that there are both combinations that will weigh stocks in the near future, and the fact that the fresh all-time high was set less than two weeks ago and we are below 3% of this marker suggests that this is more of a retreat here. The current resistance of the S&P 500 continues to be seen in the 61.8% Fibonacci extension of the July withdrawal. This level reached its highest level yesterday morning and has not yet been removed. On the support side, there is a bullish trend line forecast, which is currently around 4427 and would be currently at the s1 level. However, a little deeper is a more attractive zone, taken around 4364-4384.
S&P 500 daily price schedule
In a short-term look and to see the following charts that I look at on the Nasdaq 100 and the Dow, the Fibonacci retracement has been applied to a significant move ranging from the low of 19 August to the highest on September 3. Note that to date, the S&P 500 has captured a 50% mark on this move.
S&P 500 four-hour price chart
Nasdaq 100 threatening breakthrough
Given the sensitivity of the interest rate derived from this morning’s inflation press release, the Nasdaq 100 looks more pushy than the S&P 500.th low until September 3rd high and the Nasdaq 100 didn’t even test a 38.2% retracement as the S&P 500 continues to grind at 50. And this morning, even though the S&P 500 has sold a little more, the Nasdaq 100 has reached a significant point of resistance, taking 23.6% of the Fibonacci retracement by the same amount.
This makes the Nasdaq 100 more attractive for currently rising US stock games.
For more information on Fibonacci, see DailyFX education
Nasdaq 100 four-hour price chart
Dow as an ugly duckling
At this point, the Dow looks pretty weak and has some breakage potential. If you want to post short plays on US stocks, this is an index worth looking at.
Both of the above indices are holding back from 19 Augustth – September 3rd A big step, the Dow is immediately back in the slump. And that August 19th low was tested last Friday, but so far it has been supported.
The steep breakdown here could take a quick step down, with recent support for just under 33,623 and a Friday swing nearby.
Dow Jones four-hour price chart
– Written James Stanley, Senior strategist For DailyFX.com
Get in touch and follow James Twitter: @JStanleyFX