the week ahead for sp 500 dax 24 oct to 28 oct maintain bullish bias 1835462016

S&P 500 – Still holding above support  with potential upside trigger at 2150

(Click to enlarge charts)

Key Levels (1 to 3 weeks)

Intermediate support: 2133

Pivot (key support): 2124

Resistances: 2150 (upside trigger), 2174/80 & 2194

Next support: 2110/100 (downside trigger) & 1990

Medium-term (1 to 3 weeks) Outlook

The U.S. SP 500 Index (proxy for the S&P 500 futures) has continued to hold above the 2110/100 significant pull-back support (see daily chart) but it remains below the 2150 medium-term upside trigger. Please click here to recap our previous weekly technical outlook.

On the positive side, recent price actions has shaped a series of “higher lows” with an ascending trendline support acting as a floor at 2133 (see 4 hour chart).  In addition, the 10-year U.S. Treasury (T-Note) yield is still below the key long-term pivotal resistance of 1.98 (refer to the 3^rd chart) which indicates that liquidity conditions have not contracted severely which is positive for equities.

Also, the “growth oriented” benchmark Nasdaq 100 has continued to outperform against the S&P 500 since 22 August 2016 (refer to the 4^th chart) and this week’s Q3 earnings announcements will be centred on several big technology firms such as (Apple-26 Oct) and (Alphabet/Google & Amazon-27 Oct). Therefore, if these big tech firms are able to beat their respective earnings expectations, it is likely to create the catalyst for the S&P 500 to break above the 2150 level.

We are maintaining our bullish bias for the S&P 500 with a tightened medium-term pivotal support at 2124 and a break above 2150 is likely to open up scope for a further potential up move towards 2174/80 before a retest on the current all-time high at 2194.

On the other hand, failure to hold above 2124 may invalidate the bullish bias to see a choppy decline towards the 2110/2100 significant pull-back support.

DAX- Bullish breakout from “Expanding Wedge” range top

(Click to enlarge charts)

Key Levels (1 to 3 weeks)

Intermediate support: 10700/660

Pivot (key support): 10450

Resistances: 10990 & 11190

Next supports: 10230 (downside trigger) & 9760

Medium-term (1 to 3 weeks) Outlook

The Germany 30 Index (proxy for the DAX futures) has shaped the expected bullish breakout from the 2-months plus of sideways configuration (“Expanding Wedge”) in place since 15 August 2016 as it has a daily and weekly close above 10700 (the “Expanding Wedge” top). Please click on these links, here & here to recap on how we have anticipated this bullish breakout.

Technical elements remain positive for both Elliot Wave/fractal analyses and momentum indicators. The daily (medium-term) RSI oscillator has continued to inch upwards after its pre-signal bullish breakout from its trendline resistance (occurred before the Index’s price action bullish breakout from the Expanding Wedge).

Therefore, as long as the tightened 10450 medium-term pivotal support holds, the Index is likely to shape a potential further upside movement to target 10990 follow by 11190.

On the other hand, failure to hold above 10450 may invalidate the preferred bullish bias to see a choppy decline to retest the significant range support at 10230. Only a clear break below 10230 (daily close) is likely to trigger a deeper decline towards the next support at 9760.

Charts are from City Index Advantage TraderPro & eSignal

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