Dow, Nasdaq 100, S&P 500 Technical Forecasts: Bullish

  • S&P 500 to another all-time-high after FOMC.
  • Nasdaq 100 acceleration in trend as rates have fallen after a dovish outlay at FOMC.
  • Dow Jones fresh all-time-highs, but lagging behind the S&P and Nasdaq.

It was a strong week in the equity space as the Fed took on a dovish tone at Wednesday’s rate decision. And while this is somewhat of a ‘par for the course’ type of observation, it carried some additional impact given the outlay at the September FOMC rate decision where the bank started to open the door to rate hikes. Rates markets started to price in a second hike for 2022 and given the continued pace of inflation, there was thought that the Fed might continue with the hawkish tonality, but that clearly did not happen as Powell refused to entertain projections around rate policy, instead saying that the bank was looking for maximum employment before starting to tighten rates.

This helped to springboard equities up to another fresh all-time-high and that enthusiasm continued through Thursday and Friday trade with fresh highs in the all of the Dow, Nasdaq 100 and S&P 500 printing after the NFP report to finish the week.

At this point, there’s little evidence to suggest that these trends are ready to turn over. But given how aggressively they’ve been priced-in, chasing at current levels could be a daunting proposition. Triggering fresh exposure at current levels appears unattractive given the lack of any recent pullbacks, and getting long here could be akin to chasing.

S&P 500

The S&P 500 was up by as much as 10.6% from the October 1st low. Chasing after such an expansive move could be challenging, but there’s not a significant amount of evidence that yet supports reversal themes. For pullbacks, the prior point of resistance around the 4590-4600 remains attractive for possible higher-low support.

S&P 500 Weekly Price Chart

Chart prepared by James Stanley; S&P 500 on Tradingview

Nasdaq 100 Technical Forecast

The Nasdaq has a similar look to the S&P 500 with perhaps even a bit more acceleration after last week. With the Fed taking a dovish tone, rates markets have fallen and this may make an even more bullish argument near-term for the Nasdaq than the S&P 500 or the Dow Jones.

The Nasdaq 100 just shredded through the 16k psychological level this week and that’s a point of potential support in the event of a pullback. On the upside, there’s a Fibonacci extension at 16251 that remains of interest. At this point it would be very difficult to justify bearish stances given this exuberant strength, but that level could be a point of contention for pullbacks or breakouts in the topside move.

Nasdaq 100 Weekly Price Chart

Chart prepared by James Stanley; Nasdaq 100 on Tradingview

Dow Jones Technical Forecast

On a relative basis, the bullish move in the Dow has been a bit less emphatic than what was looked at in the above two markets of the S&P 500 and the Nasdaq 100. Nonetheless, this week did mark yet another fresh all-time-high for the index with the Thursday breakout continuing through Friday trade.

While the backdrop remains bullish here, there may be more amenable pastures for continuation elsewhere, such as the two markets looked at above or perhaps even the Russell 2000 index, which finally broke out to a fresh all-time-high this week. For support potential, the nearby prior swing high around 35,500 stands out, and below that, the 33,500 area could serve as invalidation should the trend take a bearish turn.

Dow Jones Daily Price Chart

Chart prepared by James Stanley; Dow Jones on Tradingview

— Written by James Stanley, Senior Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX