S&P 500; US Indexes Fundamental Daily Forecast – Technical Momentum Shift, Trump Speech Providing Early Support

The three major U.S. equity indexes finished mixed on Monday with the blue chip Dow finishing higher along with the bench mark S&P 500 while the tech-based NASDAQ posted its third straight loss. Technology stocks were under pressure across the board. Uncertainty over the direction of U.S. interest rates also weighed on financial stocks.

In the cash market, the Dow Jones Industrial Average settled at 21703.75, up 29.24 or +0.13%, the S&P 500 Index closed at 2428.37, up 2.82 or +0.12% and the NASDAQ Composite ended the session at 6214.39, down 2.14 or -0.03%.

Forecast

The price action suggests that investors are growing uncertain about the short-term direction of the market. Some of the selling pressure is related to the thin, end-of-the-summer trade. Other investors are worried about the economy, the Trump presidency, North Korea and Fed policy. Basically, we’re not seeing a lot of positives out there.

Seasonal traders are also pointing toward the tendency of the stock market to weaken from late August through the end of September.

According to data from Bespoke Investment Group, the S&P 500 has posted a median return of 0.04 percent in the two weeks between August 21 and September 9 over the past 10 years. During the past two years, however, the S&P has declined 0.2 percent and 2.5 percent, respectively.

The major indexes are responding positively to President Trump’s speech, delivered Monday night.  The markets are also responding to a successful test of their respective retracement zones. These zone represent value to some investors.

Volume is light, volatility is high so investors should continue to watch for two-sided swings. There are no major economic events this week, other than Friday’s speech by Fed Chair Janet Yellen on Friday so the indexes are going to be more sensitive to news driven events.

September E-mini S&P 500 Index futures held support at 2415.00. If the upside momentum continues then we could see a short-term rally into 2446.75 to 2453.25.

September E-mini Dow Jones Industrial Average futures overshot their downside target, but still ended up posting a potentially bullish closing price reversal bottom. Its primary upside target is 21824 to 21882.

September E-mini NASDAQ-100 Index futures tested a major support zone at 5778.00 to 5726.75. The early price action suggests the index may be headed to 5851.00 to 5874.25 over the near-term.