S&P500, Nasdaq100 and Dow price trends still intact despite correction
Traders are reminded that US Indices can now be traded in rands from a local account
US 500 (S&P500)
The US 500 has started a minor correction from overbought and all-time high territory with the price now moving to test support at 6000.
The long-term trend for the index does however remain up. This suggests that trend followers might continue to keep a long bias to trades on the index, waiting to see where the current correction ends before accumulating new positions.
For long entry we are looking for a bullish price reversal off one of the labelled support levels on the chart above. In this scenario, overhead resistance at 6200 provides a longer-term target, while a close below the reversal low could be used as a stop loss consideration.
US Tech (Nasdaq100)
The technical setup for the US Tech index is like that of the US 500 in that we have seen the start of a minor correction from overbought and all-time high territory with the price now moving to test support (21220).
The long-term trend for the index remains up. This suggests that trend followers might continue to keep a long bias to trades on the index, waiting to see where the current correction ends before accumulating new positions.
For long entry we are looking for a bullish price reversal off one of the labelled support levels on the chart above. In this scenario, overhead resistance at 22815 provides a longer-term target, while a close below the reversal low could be used as a stop loss consideration.
Wall Street (Dow Jones Industrial Average)
The Wall Street index’s correction from all time and overbought territory appears slightly more pronounced / developed than that of its index peers. This is noted by the Stochastic having already entered oversold territory since the move lower.
In line with the prevailing uptrend longer term, trend followers might prefer to look for long entry on a bullish price reversal closer to support to suggest the end of the short term correction and possible resumption of the aforementioned uptrend. Preferably we would like to see the price reversal accompanied by a move out of oversold territory.
In this scenario, 46030 provides a longer-term upside resistance target while a close below the reversal low might be used as a stop-loss indication.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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