Mid-Week Technical Outlook: Major Indices

Sentiment in general remains shaky and fragile thanks to concerns over slowing global growth with investors adopting a guarded approach ahead of what could be a volatile event. Markets widely expect the Federal Reserve to raise interest rates by 75bp in November but much attention will be directed towards the press conference which could offer fresh clues into monetary policy.

Our focus this afternoon will be directed toward the global equity arena, especially US indices which remain highly reactive to Fed rate hike expectations.

S&P 500 Tangled Between MA’s

After failing to secure a daily close above the 100-day SMA, the S&P 500 has the potential to trade lower if the 50-day SMA is breached. A strong breakdown below 3810 could trigger a selloff towards 3760 and 3700, respectively. Should 3810 prove to be reliable support, prices could rebound towards 3945 and 4000. It is worth keeping in mind that the short-term outlook will be influenced by the Fed meeting this evening and the US jobs report on Friday.

Nasdaq Trapped Below 11650?

It looks like the Nasdaq could gearing up for a selloff. After failing to break above the 11650 resistances, prices have tumbled with bears eyeing the 11037 supports. The Fed rate decision and press conference may influence the Nasdaq’s short-term outlook. Technical levels to watch out for are 11037 and 10716. Given how prices are trading below the 50, 100, and 200 Simple Moving Average – bears still have some power. A strong break under 10716 could signal a selloff towards 10436.

FTSE 100 Lingers Below Resistance

Since punching above the 7200-resistance level, prices have struggled to push higher as the 100-day Simple Moving Average offered another line of resistance. Although the FTSE100 has staged a rebound from the 6705 regions, prices still remain in a bearish channel. Should 7200 prove to be a tough nut to crack for bulls, prices could sink back towards 7000. Alternatively, a strong breakout above 7200 may open the doors towards 7340 – a level where the 200-day SMA resides.

EURO STOXX 50 Breakout or Fakeout?

This index remains in an uptrend on the daily charts as there have been consistently higher highs and higher lows. Prices are trading above the 50 and 100-day SMA but below the 200-day which could offer strong resistance. If bulls lose momentum and secure a solid daily close below 3650, this may trigger a selloff back towards 3550 – a level just above the 100-day SMA. Alternatively, a strong daily close above the 3685 regions could inject bulls with enough confidence to push above the 200-day SMA. Such a development may result in an incline towards 3700, 3770, and 3820, respectively.

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