S&P 500, Dow Jones, Nasdaq 100 Technical Outlook for the Days Ahead

U.S. Indices Technical Outlook:

• S&P 500 looks headed lower, but there will be rallies along the way
• Until we see a cascade in selling, VIX spike, rallies are likely to fail
• S&P 500, Nasdaq 100, Dow Jones technical outlook

S&P 500, Dow Jones, Nasdaq 100 Technical Outlook for the Days Ahead

The outlook for stocks remains the same, bearish. The S&P 500 continues to probe new lows during this cycle, and doing so with limited urgency by sellers. Sure, sentiment is bearish and could even be considered extreme by some measures. But until we see price action match bearishness, that is see a mini-route at the least, then stocks are likely to continue to go lower.

How much lower is hard to say. The area around 3400/500 could come in as a support zone (3400 = top before the pandemic), but if things get panicky then that zone could easily be exceeded. It is difficult to say where a low will come in until we see a rush to the exit and a spike in the VIX.

As long as rallies continue to develop from a rather benign sell-off they are seen as likely to fail. The rallies could be weak in nature, or very sharp but short-lived like the ones we had to begin last month and this month.

We will get to a tradeable low at some point, and it seems like it could be relatively soon. But until there is a liquidation event selling rallies appears like the most prudent way to approach markets at this time.

S&P 500 Daily Chart

S&P 500 Chart by TradingView

The Nasdaq 100 is leading the way in recent sessions and if you are bearish this is what you want to see. When tech stocks drive or show relative strength/weakness to other sectors it is a signal worthy of watching.

The high prior to Covid was 9736, a level that could be seen in rather short order. On the top-side resistance first clocks in around the June low at 11037, then 11300/450 area.

Nasdaq 100 Daily Chart

Nasdaq 100 Chart by TradingView

TheDow Jonesis finding resistance around the pre-Covid high at 29568, as it is well ahead on the course lower. There is a gap from the 2020 election down at 28299 that looks next up to get filled. On a bounce even if the 29568 level if overcome it isn’t seen as holding for long.

Dow Jones Daily Chart

Dow Jones Chart by TradingView

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—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX