Nikkei 225 rally continues while Dow and S&P range trade ahead of megacap earnings
Nikkei 225 rally continues despite Japan's ruling party losing its parliamentary majority while Dow and S&P range trade ahead of this week’s US megacap earnings.
Nikkei 225 rally continues despite political uncertainty
The Nikkei 225's over 3% rally since this weekend’s election result at which Japan's ruling party lost its parliamentary majority has taken the index above its 200-day simple moving average (SMA) at 38,591 as the country's jobless rate slid to an eight-month low.
The late July and early September highs at 39,179-to-39,281 are now in focus, a rise above which would likely engage the late September high at 39,942 and the psychological 40,000 mark.
Support below the 200-day SMA is seen along the 55-day SMA at 38,138 and the August-to-October tentative uptrend line at 37,560.
Dow Jones Industrial Average quiet ahead of key earnings
Last week’s over 2.5% drop in the Dow Jones Industrial Average has been followed by low volatility range trading above Friday’s low at 42,046 ahead of key US earnings this week. This low was made marginally above the August-to-October uptrend line at 42,000 and the early October low at 41,802. While this level underpins, the medium-term uptrend is deemed to be intact.
Failure at 41,802 would put the July-to-August highs at 41,587-to-41,207 on the map and would probably lead to a break of the medium-term uptrend with perhaps the September low at 39,989 being back in focus.
Immediate bearish pressure will be maintained while Friday’s high at 42,609 isn’t overcome.
S&P 500 hovers below all-time high
The S&P 500 has come off its mid-October record high at 5,882 and dipped to 5,763 last week before range trading in low volatility above this low point as investors await several US megacap earnings over the next three days.
A rise above Friday’s 5,864 high would likely put the current October all-time high at 5,882 back on the map, together with the psychological 6,000 mark.
Were a fall through the August-to-October uptrend line at 5,800 to be seen, though, the September high at 5,773 would be expected to be revisited and probably also last week’s low at 5,763. Failure there would push the early October low at 5,674 to the fore. This level is the line in the sand for the medium-term uptrend as a fall through it would confirm at least an interim top formation.
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