S&P 500 (SPX), Dow Jones (DJI), Nasdaq Composite (IXIC) Daily Technical Outlook: Yield Surges & Global Tensions Rattle Markets Today

Key Insights

• US, Europe stocks decline amid rising US treasury yields, Israel-Hamas tensions escalate.
• September sees a 2% drop in US home sales; year-on-year fall is a pronounced 15.4%.
• S&P 500 trends bearish with key resistance at $4,347 and a declining RSI of 39.
• NASDAQ’s bearish bias accentuated as it operates below the 50 EMA mark of $13,448.

Quick Fundamental Outlook

Global stock markets, including in the US and Europe, faced downturns on Friday due to surging US treasury yields hitting a 16-year peak and growing tensions in the Israel-Hamas situation. As of October 20, 2023, the MSCI global stock index reported a 0.89% dip, and emerging markets experienced a 1.23% decline.

Comments from Federal Reserve Chairman Jerome Powell, hinting at potential interest rate increases tied to a strong economy and a constricted labor market, spurred trader caution. This cautionary stance negatively impacted major US indices, including the S&P 500, Nasdaq Composite, and Dow Jones.

Data from the National Association of Realtors (NAR) highlighted a 2% drop in US existing home sales for September, a gentler fall than the predicted 3.5%. Nonetheless, a stark 15.4% year-on-year decrease was noted, which NAR links to elevated mortgage rates.

S&P 500

The S&P 500 (SPX) is priced at 4277.99, marking a decline of 1.06% over the past 24 hours. Analyzing a 4-hour chart timeframe, we can identify crucial price levels. The pivot point stands firm at $4,334.

On the upside, resistances are poised at $4,394, $4,451, and $4,502, while on the downside, we find support levels at $4,289, $4,216, and $4,172. Turning our attention to technical indicators, the Relative Strength Index (RSI) is pegged at 39. This figure, being under 50, signals a bearish sentiment in the market.

Moreover, the 50-day Exponential Moving Average (50 EMA) is currently at $4,347. Given that the price is below this EMA, it reinforces the notion of a short-term bearish trend. Observations from the chart patterns show a downward channel, indicating that the S&P500 is potentially headed for continued bearish momentum.

In conclusion, the overall trend for the S&P500 seems to be bearish, especially below the $4,347 mark.

NASDAQ

The NASDAQ, a vital barometer of the tech sector, witnessed its price decline to $13,186.18, marking a dip of 1.15% over the past 24 hours, as per the 4-hour chart timeframe. Key price junctures to monitor include an immediate resistance set at $13,610, followed by subsequent resistances at $13,965 and $14,203.

On the flip side, support benchmarks commence at the immediate $13,090 level, with additional cushions delineated at $12,909 and $12,748. The Relative Strength Index (RSI) currently stands at 37, showcasing a prevailing bearish sentiment, given its position below the pivotal 50 mark.

Further accentuating this bearish tenor is the 50-day Exponential Moving Average (50 EMA), which is charted at $13,448 — with the NASDAQ trading beneath this key average. As of now, chart patterns hint at a consolidation phase, suggesting the index is gearing up for its next substantial move.

In summation, the NASDAQ embodies a bearish bias, particularly when operating below the $13,448 mark. Over the short haul, expectations tilt towards the NASDAQ testing its upper resistances in the upcoming sessions.

Dow Jones

On the heels of recent market shifts, the Dow Jones Industrial Average (DJIA) is currently priced at $33,408.50, reflecting a drop of 1.03% over the last 24 hours. Technical analysis reveals pivotal markers for traders to monitor. A near-term resistance is observed at $34,346, with subsequent ceilings charted at $34,983 and $35,643.

Conversely, immediate downside support is positioned at $33,250, trailed by further cushions at $32,873 and $32,356. Delving into technical indicators, the Relative Strength Index (RSI) clocks in at 41, revealing a bearish sentiment as it sits below the 50 threshold.

This sentiment is buttressed by the 50-day Exponential Moving Average (EMA), which registers at $33,824—currently overshadowing the DJIA’s trading level. The prevailing chart patterns, notably a downward channel paired with a bearish engulfing candlestick below the 50 EMA, strongly underscore a selling sentiment.

In summary, the DJIA’s trajectory seems bearish below $33,408. In the short term, barring unforeseen catalysts, the index may grapple with its resistance zones, especially the proximate $34,346 benchmark.

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