S&P 500 – Eying a new potential all-time high (Click to enlarge charts) Key Levels (1 to 3 weeks) Intermediate support: 2150 Pivot (key support): […]
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Intermediate support: 2150
Pivot (key support): 2120
Resistances: 2211 & 2245
Next support: 2100 (downside trigger) & 2032
Last week, the U.S. SP 500 Index (proxy for the S&P 500 futures) had staged the bullish breakout above the 2155 medium-term upside trigger level after a bear trap seen on the 2090/85 medium-term pivotal support where it plummeted to a low of 2032 on 09 November 2016 when the votes were in favour of Donald Trump’s U.S. presidential victory. However from a technical analysis perspective, we are hesitance to turn bearish at that juncture and were advocating for a potential recovery instead (please click on this link to recap the details).
Technical elements remain positive with the weekly (long-term) RSI oscillator that continues to inch upwards its support and 50% level. These observations suggest that upside momentum of price action remains intact.
Based on the Elliot Wave Principal and fractal analysis, 2032 low seen on 09 November 2016 is likely the end of the intermediate degree bearish corrective wave (4) in place since 23 August 2016 all-time high of 2194. The current up move in progress is likely the intermediate degree bullish impulsive wave (5) to complete the longer-term primary degree wave V in place since 07 February 2016 low. Potential medium-term upside targets are now at 2211 and 2245.
Intermediate support now rests at 2150 (the former descending trendline resistance from the 23 August 2016 all-time high now turns pull-back support) with medium-term pivotal support at 2120.
However, do be cautious of the current up move seen in global equities as the yield on the 10-year U.S. Treasury Note has already broken above the 1.98 long-term pivotal resistance with “bottoming” elements to end its 20-year plus of downtrend potentially. Interestingly, the spike see in U.S. treasury yields s last week also coincides with spikes seen in other developed nations’ sovereign bond yields as well which can lead to a contagion risk of a tightening in global liquidity conditions. These occurrences may trigger a severe correction in equities if earnings growth does not increase in line with a pick-up in interest rates. Therefore, in summary, the current up move seen right now in global equities is likely the “melt-up” upleg before a potential correction sets in.
(Click to enlarge charts)
Intermediate support: 17400
Pivot (key support): 17270
Resistances: 18000 & 18630
Next support: 16960 (downside trigger), 16340 & 15900
The Japan 225 Index (proxy for the Nikkei 225 futures) has managed to stage a bullish breakout above the 17500 resistance (neckline of the “basing formation” in place since 12 February 2016 low and the descending trendline from 21 June 2015 high) after a “bear trap” at the 16960/800 medium-term pivotal support due to the recent U.S. presidential election. The Index has moved within our expectation as per highlighted in our last weekly technical outlook/strategy, please click here for a recap.
Right now, technical elements are still positive with the next significant resistance at 18630 as per defined by the upper boundary of the bullish ascending channel in place since 24 June 2016 low (Brexit) and a Fibonacci cluster. Intermarket analysis via the USD/JPY is also advocating for a further potential upside movement in the Nikkei 225 as the USD/JPY continues to evolve in a bullish trend holding above its medium-term pivotal support at 106.00 with resistances at 109.56 follow by 109.95.
Intermediate support now rests at 17400 (the pull-back of the former broken descending trendline resistance from 21 June 2015 high) with the key medium-term pivotal support now at 17270, the Index is expected to shape a further potential upleg to target 18000 before 18630 next.
However, a break below 17270 is likely to but the bulls on hold again for a retest on the 16960 ascending channel support. Only a clear break below 16960 (a daily close below it) shall open up scope for a further decline towards the next support at 16340.
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Supports: 21400 & 19640
Resistances: 23100, 24500 & 25400
The Hong Kong 50 Index (proxy for Hang Seng Index futures) has failed to surpass the 23100 medium-term upside trigger level and broke below the 22700/470 medium-term pivotal support. The Hong Kong 50 Index is the worst performing major stock indices in our coverage as it has failed to take part in the “post – U.S. presidential election rally”.
One of the reason is due to positioning between “A” and “H” shares where “H” shares are shares of a company incorporated in China that are listed on the Hong Kong Stock Exchange. These “H” shares also have a dual listing in the China stock exchange, labelled as “A” shares.
Since early Feb 2016, the premium between “A” and “H” shares (as indicted by the AH Premium Index in the 3rd chart) has narrowed from 146.07 to 118.26 in October 2016) which suggests that “A” shares now are relatively more “cheaper” that their respective “H” shares. In addition, the broad based Shanghai Stock Exchange Composite Index has staged a rally of 6% since late September 2016 which also assisted to create a positive feedback loop back into the “H” shares via momentum. Therefore, it is likely that the recent weak performance seen in the Hang Seng Index are caused by outflows from the Hong Kong stock market flowing into the China stock market to take advantage of the relatively low premium seen in the “A” shares over its respective “H” shares.
Thus, we have decided to turn neutral in the Hong Kong 50 Index between 23100 and 21400. Only a break above 23100 is likely to revive the bullish tone.
(Click to enlarge charts)
Intermediate support: 5310
Pivot (key support): 5280
Resistances: 5460 & 5570/5610
Next supports: 5148 & 5040
The Australia 200 Index (proxy for the ASX 200 futures) has staged a strong rebound from the long-term ascending channel support at 5148 in place since March 2009 (see weekly chart).
The Index has also reintegrated back above the lower boundary of the medium-term ascending channel in place since 10 February 2016 low which suggests that the decline seen two weeks ago that can be considered as a “bear trap” – failure breakdown.
Technical elements have turned positive, thus as long as the 5280 medium-term pivotal support holds, the Index is likely to see a further potential push up to test the descending trendline in place since 01 August 2016 high now at 5460. The bulls need to clear the 5460 “hurdle” in order to open up scope for a further potential rally to target the next resistance zone of 5570/5610.
However, failure to hold above the 5280 medium-term pivotal support may invalidate the preferred bullish bias for another round of choppy decline to retest the 04 November 2016 swing low area of 5148.
(Click to enlarge charts)
Pivot (key support): 10575
Resistances: 10990 & 11190
Next support: 10230/200 & 9965
The Germany 30 Index (proxy for the DAX futures) has staged the expected bullish breakout above the 10650 upside trigger after the initial “noise” around the 10230/200 medium-term pivotal support caused by the U.S. presidential election.
Technical elements remain positive with the daily RSI oscillator that has continued to inch upwards above the 50% level and still has ample room to manoeuvre to the upside before reaching its extreme overbought level. These observations suggest that medium-term upside momentum of price action remains intact.
Based on the Elliot Wave Principal and fractal analysis, the last Wednesday, 09 November low of 9965 has marked the potential end of a minor degree corrective wave 4/ and the bullish impulsive minor degree wave 5/ has been in progress to complete the intermediate degree wave (c) with potential end targets set at 10990 and 11190.
Therefore, as long as the 10575 medium-term pivotal support holds, the Index is likely to shape a further potential upside movement to target 10990 follow by 11190 next.
On the other hand, failure to hold above the 10575 medium-term pivotal support may invalidate the preferred bullish tone to see another round of choppy decline to retest the 10230/200 support.
Charts are from City Index Advantage TraderPro & eSignal
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