S&P 500, Dow Jones & Nasdaq 100 Forecast: Charts Rolling Over

U.S. Indices Technical Highlights:

  • S&P 500 rolling over after breaking out of channel
  • Nasdaq 100 appears headed for one-year slope
  • Dow Jones 200-day may soon come into play

S&P 500, Dow Jones & Nasdaq 100 Forecast: Charts Rolling Over

It’s long been a tough battle to be bearish stocks for any real length of time, and while this may very well be the case this time around again, there is reason to look for more weakness in the short-term.

The S&P 500 broke down out of a multi-month channel at the beginning of last week, which was followed by a retest of the broken underside trend-line of the formation. Yesterday’s turn lower points to a validation of the breakdown out of the upward structure since May and that we will see further weakness.

The recent low at 4305 looks at risk of breaking soon, which will open up a pathway towards the 200-day moving average at 4127. If the market declines to that point then volatility is likely to be high and favoring two-way trade for short-term traders.

If we see the recent low hold and the market start to forcefully move back higher, then once again a small dip that had potential for significant weakness will have turned out to be a false alarm.

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S&P 500 Daily Chart

S&P 500 daily chart

S&P 500 Chart by TradingView

The Nasdaq 100 is well on its way towards breaking down to a slope from last September and the 200-day at 13927. It is currently rolling lower out of a head-and-shoulders pattern, but the only thing that makes it a bit of a weak pattern is the very shallow right shoulder by comparison to the left. Whether you are looking at this through the lens of a valid pattern or not, the technical backdrop isn’t very favorable for the NDX right now.

Nasdaq 100 Daily Chart

Nasdaq 100 daily chart

Nasdaq 100 Chart by TradingView

The Dow Jones is rolling over but is stronger than the Nasdaq 100 right now. Broadly speaking, though, it remains stuck in a generally sideways chop pattern. This makes the outlook in the near-term murky still, but if risk-off grips markets then the outlook is lower. The 200-day moving average isn’t very far away and also very nearly collides with support in the 33200s. A decline to that juncture could make for an interesting inflection point as big support either holds or the multi-month sideways grind gets undercut and possibly leads to much broader weakness.

Dow Jones Daily Chart

Dow Jones Daily Chart

Dow Jones Chart by TradingView

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—Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at @PaulRobinsonFX