S&P 500, Nasdaq, Dow Forecast for the Week Ahead

Equity Indices Technical Forecast: Weekly Trade Levels

U.S. equity indices unphased by U.S. government shutdown into the start of October
S&P 500 breakout marks six-days up- momentum vulnerable into uptrend resistance
Nasdaq now testing major technical resistance- risk for possible price inflection ahead
Dow breakout remains viable into October after five-week stretch / six-day rally

Review my latest Weekly Strategy Webinar for an in-depth breakdown of these equity indices and more. Join live on Monday’s at 8:30am EST.

S&P 500 Price Chart – SPX500 Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; S&P 500 on TradingView

Technical Outlook: The S&P 500 closed a fifth-consecutive weekly advance on Friday with SPX500 rallying nearly 8.6% off the August low. The index closed above lateral resistance this week at the 1.382% extension of the January decline at 6665 and keeps the uptrend intact into the start of October trade. Note that weekly momentum is at the highest levels of the year with RSI breaking above 70 this week for the first time since July of 2024.

S&P 500 Price Chart – SPX500 Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; S&P 500 on TradingView

In my last equity forecast we noted that the S&P 500 was consolidating below uptrend resistance into the close of August and that, “From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops- losses should be limited to consolidation support IF price is heading higher on this stretch with a close above the 75% parallel needed to fuel the next major leg of the advance.” A topside breach on September 11 has extended more than 6% off the September low with the six-day advance hitting a fresh record high on Friday.

Initial support now rests with the August trendline near ~6606 and a break below this slope would be needed to suggest a more sigfniicant high is in place / a lager reversal is underway. Subsequent support seen at 6500 and the July high-day close (HDC) / August open at 6342. Broader bullish invalidation rests at 6130/40- a region defined by the 100% extension of the 2020 advance, the 2025 yearly opening-range highs, and the February high-day close.

Initial resistance is eyed with the upper parallel, currently near 6790s- a breach of channel resistance would be needed to fuel the next major leg of the advance towards subsequent objectives at 6911/98- a region defined by the 2.618% extension of the April advance and the 1.618% extension of the yearly range. Look for a larger reaction there IF reached.

Bottom line: The S&P 500 is trading just below uptrend resistance into the start of the month with daily divergence suggesting the immediate rally may vulnerable near-term. Keep in mind that October is seasonally the third highest performing month for the S&P 500. From a trading standpoint, losses should be limited to 6605 IF the index is heading higher on this stretch with a pivot above channel resistance needed to mark uptrend resumption.

Nasdaq Price Chart – NDX Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; NDX on TradingView

Technical Outlook: Nasdaq registered a fresh all-time high on Friday but closed lower on the session with NDX ending the week up more than 1.2%. The rally takes the index into a critical resistance zone we’ve been tracking for months now at 24,640-25,041- a region defined by the 2.618% extension of the April rally and the 200% extension of the broader 2022 advance. Note that the upper parallel of an ascending pitchfork extending off the August 2024 low converges on this threshold into the start of the month and further highlights the technical significance of this zone in the days ahead. Looking for a reaction off this level for guidance.

Weekly support rests with the August high-week close (HWC) at 23,712 and a close below this threshold would be needed to suggest a more significant high is in place / a larger reversal is underway. Subsequent support seen at 23,000 with bullish invalidation steady at the 2024 high / February high close at 22,115/33.

A topside breach / weekly close above confluent resistance would likely fuel another bout of accelerated gains with subsequent objectives eyed at 26,000 and the 1.618% extension of the broader 2020 advance at 26,609- look for a larger reaction there IF reached.

Bottom line: Nasdaq is trading into a key technical confluence at uptrend resistance and while weekly momentum remains in overbought territory, divergence on daily RSI suggests the advance may be vulnerable while below this threshold. A good zone to reduce portions of long-exposure / raise protective stops- losses should be limited to 23,712 IF price is heading for a breakout on this stretch with a weekly close above 25,041 needed to fuel the next major leg of the advance.

Dow Jones Price Chart – DJI Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; DJI on TradingView

Technical Outlook: The Dow Jones Industrial Average marked a fifth-weekly advance with the index closing at a fresh record high on Friday. The August breakout remains viable here daily with weekly momentum still favoring the bulls. The rally is approaching resistance at the 100% extension of the 2020 advance at 47,400- look for a larger reaction there IF reached with a weekly close above needed to keep the immediate uptrend in play. Subsequent resistance objectives eyed at the 1.382% extension of the January decline at 48,279, 50,000 and the 1.6181% extension at 50,271.

Weekly support rests along the June trendline (currently near ~46,000) and is backed by bullish invalidation at the 2024 high-close / 2024 high / January high at 44,910-45,071. Note that the median-line converges on this threshold into the close of October and a break / close below would be needed to suggest a more significant high is in place / a larger trend reversal is underway.

Bottom line: The Dow breakout is approaching uptrend resistance early in the month and the focus is on possible exhaustion / price inflection in the weeks ahead. From a trading standpoint, look to reduce portions of long-exposures / raise protective stops on a rally towards 47,400- losses should be limited to 46,00 IF price is heading higher on this stretch with a topside breach / close above parallel resistance needed to fuel the next major leg of the rally.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

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