Weekly Technical Outlook on Major Stock Indices 27 Nov to 01 Dec 2017

S&P 500 – Bullish upleg resumes through the break of 2597

Key Levels (1 to 3 weeks)

Intermediate support: 2591

Pivot (key support): 2565

Resistances: 2615 & 2634

Next supports: 2544 & 2520

Medium-term (1 to 3 weeks) Outlook

Last week, the U.S SP 500 Index (proxy for the S&P 500 futures) had broken above the 2597 key medium-term pivotal resistance after it failed to stage a clear bearish break below the 2565 significant downside trigger level on 15 Nov 2017. (Click here for a recap on our previous weekly technical outlook).

Its recent price action has reduced the probability of a medium-term (1 to 3 weeks) corrective decline phase at this juncture. Overall technical elements have turned positive;

• The daily RSI oscillator has reintegrated back above its corresponding support at the 50% level which indicates a revival of medium-term upside momentum.
• The key medium-term support now rests at 2565 which is defined by the 23.6% Fibonacci retracement of the on-going advance from 21 Aug 2017 low to last week fresh all-time  high of 2604 and the minor swing low area of 15 Nov 2017.
• Based on sector rotation analysis, the current up move is being supported by two major cyclical sectors (Technology & Consumer Discretionary) which has a combined weightage of 38% in the S&P 500. Their respective relative strength analyses on the sector ETFs have continued to indicate outperformance against the S&P 500 (see last chart).

Therefore, we have flipped back to a bullish bias above 2597 key medium-term pivotal support to see the start of another intermediate degree bullish impulsive wave sequence to target the next resistances at 2615 follow by 2634 next.

However, failure to hold above 2597 shall reinstate the corrective decline scenario towards the next support at 2544 and even 2520 next (the pull-back support zone of the former primary long-term ascending channel resistance from Mar 2009).   

Nikkei 225 –  The bears are still not out of the woods

Key Levels (1 to 3 weeks)

Intermediate resistance: 22800

Pivot (key resistance): 23010

Supports: 21830 (downside trigger), 21230/200 & 20840/715

Next resistance: 23420

Medium-term (1 to 3 weeks) Outlook

Last week, the Japan 225 Index (proxy for the Nikkei 225 futures) had staged an initial push up to print a weekly high of 22655 and stalled right below the 22800 intermediate range resistance in place since 17 Nov 2017. (Click here for a recap on our previous weekly technical outlook).

Thereafter, it traded sideways above the 21830 intermediate support aided by weak USD/JPY despite the key benchmark U.S. stock markets soared to print new record highs.

No change on its key technical elements. We maintain bearish bias below 23010 key medium-term pivotal support and added a downside trigger level at 21830 (minor swing low of 15 Nov 2017). An hourly close below 21830 shall increase the bearish conviction for the Index to shape another minor degree bearish impulsive wave, c of 8/ to target the next support at 21230/200.

However, a clearance above 23010 is likely to invalidate the bearish scenario for a squeeze up to retest 23420 swing high of 09 November 2017.

Hang Seng – Bullish breakout above 29300

Key Levels (1 to 3 weeks)

Pivot (key support): 29300

Resistances: 30010, 30700/780 & 31750/960 (Fibonacci projection cluster & current all-time high area of Oct 2007)

Next supports: 28870 (downside trigger) & 28000

Medium-term (1 to 3 weeks) Outlook

Last week, the Hong Kong 50 Index (proxy for Hang Seng Index futures) has staged a bullish breakout above the upper limit of the medium-term neutrality zone at 29300 which has indicated the start of another intermediate degree bullish impulsive wave sequence.

Overall technical elements remain positive. Thus as long as the 29300 key medium-term pivotal support holds and a break above the intermediate resistance at 30010 (minor descending trendline from 22 Nov 2017, the Index is likely to shape another potential upleg to target then next resistance at 30700/780 in the first step (upper boundary of the medium-term ascending channel from 04 Jul 2017low & Fibonacci projection cluster).

On the other hand, failure to hold above 29300 may negate the bullish tone to see a deeper pull-back towards 28870 (lower boundary of medium-term ascending channel from 04 Jul 2017low) and only a break below 28870 shall validate a potential corrective decline towards the next support at 28000.

ASX 200 – Still at risk of another leg of corrective decline below 5990/6013

Key Levels (1 to 3 weeks)

Pivot (key resistance): 5990/6013

Supports: 5950 (downside trigger), 5860 & 5800

Next resistances: 6065 & 6130

Medium-term (1 to 3 weeks) Outlook

Last week, the Australia 200 Index (proxy for the ASX 200 futures) had challenged the 5990 predefined key medium-term pivotal resistance (printed a high of 6013 on 22 Nov 2017) but did not have a clear break above it.

Based on the Elliot Wave Principal/fractal analysis, the price move of the Index since 15 Nov 2017 low does not look like it is undergoing a bullish impulsive wave sequence but rather a corrective rebound/consolidation (in the form of a triangle) to retrace the first leg of an intermediate term corrective decline from 09 Nov 2017 high.

In addition, the daily RSI oscillator has remained below its corresponding resistance at the 60% level which suggests the lack of medium-term upside momentum of price action.

Thus, we maintain the bearish bias below the 5990/6013 (excess) key medium-term pivotal resistance with 5950 as the downside trigger level (lower boundary of the on-going minor triangle range configuration since 15 Nov 2017 low). A break below 5950 is likely to add impetus for a further potential corrective decline to target the next support at 5860 with a maximum limit set at 5800 (former range top from 13 Jun 2017 & the lower boundary of ascending channel from 10 Feb 2016 low).

However, a clearance above 5990/6013 shall invalidate the bearish scenario to see a squeeze up towards the next resistances at 6065 follow by 6130.

DAX – Multi-week corrective decline phase remains intact below 13220

Key Levels (1 to 3 weeks)

Pivot (key resistance): 13220

Supports: 12847 (downside trigger), 12720/700 & 12520/500

Next resistance: 13530/560

Medium-term (1 to 3 weeks) Outlook

Last week, the Germany 30 Index (proxy for the DAX futures) has traded sideways after an attempt to stage a retest close to the predefined 13220 key medium-term pivotal resistance as per highlighted in the previous report. (Click here for a recap on our previous weekly technical outlook).

Based on the Elliot Wave Principal/fractal analysis, the price move of the Index since 15 Nov 2017 low of 12847 does not look like it is undergoing a bullish impulsive wave sequence but rather a corrective rebound/consolidation (in the form of bearish “Head & Shoulders”) to retrace the first leg of an intermediate term corrective decline from 07 Nov 2017 high.

In addition, the daily RSI oscillator has remained below its corresponding resistance at the 55% level which suggests the lack of medium-term upside momentum of price action at this juncture.

Thus, we maintain the bearish bias below the 13220 key medium-term pivotal resistance with 12847 as the downside trigger level. A break below 12847 shall increase the bearish conviction for the second leg of the intermediate term corrective decline to target the next supports at 12720/700 and even 12520/500 (Fibonacci cluster & the key primary ascending channel support from 24 Jun 2016 low) before another potential bullish impulsive wave sequence materialises.

On the other hand, a clearance above 13220 is likely to invalidate the corrective decline scenario to see a squeeze up to retest 07 Nov 2017 swing high area of 13530/560.

Charts are from City Index Advantage TraderPro & eSignal

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