Wall Street hits a six: what comes next?

Tech gains fuel US stock rally

US stocks ended the week on a high note on Friday, driven by strong performance in the technology sector following Netflix's impressive earnings report. For the week, the S&P 500 gained 0.85%, while the Dow Jones added 412 points (+0.96%). The Nasdaq 100 index was again the laggard, edging 0.26% higher.

Nonetheless, all three key indices closed higher for a sixth consecutive week, marking their best run since the end of 2023.

Notable stock movements

• Netflix surged 11% to a fresh record high of $763.89, following its upbeat third-quarter (Q3) earnings, revenue, and subscriber growth
• Apple shares rose 1.2% to $235.00 on news of higher iPhone sales in China

Earnings season continues this week, with reports scheduled from companies including Tesla, Lockheed Martin, Coca-Cola, Boeing, and American Airlines.

Economic data surprises

While last week’s flow of economic readings was mainly second-tier, it was stronger than expected. Last Thursday night’s mix of better-than-expected retail sales and initial jobless claims was enough to sway even the most passionate hard-landing advocate.

The economic calendar is quiet again this week, with the main highlights being durable goods orders and the S&P's Global US Composite Purchasing Managers' Index (PMI), which is expected to hold steady at 54.

US election insights

While Kamala Harris still holds a narrow lead in national polling, under the US Electoral College system, the election will be decided at the state level polls.

Trump is now ahead in the six key battleground states, which suggests he is well-placed to regain the White House. This explains the resurgence in the “Trump trades” at the end of last week, including gains for the US dollar, yields, equities, and, of course, Bitcoin.

Nasdaq 100 technical analysis

Our technical analysis remians unchanged from last week. Provided the Nasdaq 100 remains above short-term support at 20,000 and a more important layer of support at 19,600/19,500, we look for the index to test and break the mid-July 20,690 high before a push towards 21,500.

Aware that if the Nasdaq 100 were to see a sustained break of support at 20,000, and then at 19,600/19,500, it would warn that a deeper decline is underway towards initial support at 18,655, coming from the 200-day moving average. Below that, is the September 18,400 low and then uptrend support at 18,100 coming from the low of December 2022 at 10,671.

Nasdaq 100 daily chart

S&P 500 technical analysis

There is no change to our technical view with last week's rally in line with our article last Monday here.

Provided the S&P 500 remains above a band of horizontal support at 5760/5750, we look for the uptrend to continue, with scope to 5900. Looking forward, should the S&P 500 remain above the band of horizontal support at 5760/5750, the uptrend is expected to continue, with scope to 6000.

Should the S&P 500 see a sustained break of support at 5670/5650 against a backdrop of bearish relative strength index (RSI) divergence, it would warn that a deeper decline towards the September 5402 low is underway. Below that, there is support at 5306 coming from the 200-day moving average before the low of August at 5119.

S&P 500 daily chart

• _{Source: TradingView. The figures stated are as of 21 October 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}