Technical Market Outlook and Review – 9 February

S&P 500

Major US equity indices were on the ropes during the US morning session, with the S&P 500 trading as low as 1.0%.

The technical picture for the monthly, weekly and daily timeframes, however, remains interesting and largely supportive of further outperformance. The following is a reminder of where I left the bigger picture in recent analysis, albeit slightly modified to reflect current price movement:

The monthly chart has remained in a dominant uptrend since early 2009. We had two notable corrections in that time, one in early 2020 (COVID), dropping 35%, and one in play since early 2022 (27% from 4,818, as of writing) which was accompanied by negative divergence out of the Relative Strength Index (RSI).

The weekly chart connected with Quasimodo resistance at 4,177, closely shadowed by the 4,325 15 August high (2022). Should sellers take hold, a retest of the recently breached trendline resistance (taken from the high at 4,818) could unfold and offer support. However, backing further buying on this timeframe, the Relative Strength Index (RSI) ventured above the upper boundary of an ascending triangle between 53.72 and 30.47. This emphasises positive momentum until reaching the overbought threshold (70.00). While these triangles are generally found in uptrends, they can also forge reversal signals.

Out of the daily timeframe, 4,087 support had its upper space tested this week, a level that delivered strong resistance between September 2022 and January 2023. Given we are still holding ground north of the support, and a Golden Cross presented itself: the 50-day simple moving average (3,964) crossing above the 200-day simple moving average (3,946), price recoiling from its current location and running for the 4,325 15 August high mentioned on the weekly scale could materialise, closely followed by a daily 100% projection (AB=CD harmonic resistance) at 4,378.

H1 support from 4,100 and trendline support, drawn from the low 3,885, have withstood downside efforts. Beyond these levels point to support from 4,050 and a neighbouring trendline support, taken from the low 3,803, while pursuing higher ground focusses on Quasimodo resistance at 4,183, followed by a Quasimodo support-turned potential resistance at 4,219.