Overview
As discussed in Wednesday’s note, “a tactical rally does not change the trend” in stocks. Thus, after a short-term relief rally, the technical signs point to further weakness ahead. Stocks aside, we would also suggest keeping a very close eye on FX and, in particular, EURUSD, where a small shift of momentum either way could trigger the next directional move.
Breakdown & Trade Recommendations:
- S&P 500 – SPX: Downtrend intact with resistance at 200-day MA; short-term targets at 5479/65, with further downside potential to 5175.
- Nasdaq Composite – CCMP: Below 200-day MA, vulnerable to declines; critical support at 17,691, with lower targets at 17,539 and 16,807.
- Dow Jones Industrial Average – INDU: Remains strongest of the Big Three; holding above 200-day MA, but watch for potential pullback to 42,116 and 41,953.
- Euro Stoxx – SX5E: Bearish after breaking support; monitor for continued downward movement with support at 5271 and 5251.
- DAX – DAX Index: Consolidating with a potential uptrend break; key supports at 22,080 and 21,585 after breaking previous support.
- US Generic Govt 10 Yr Note – USGG10YR: In limbo with a slight bias towards lower yields; crucial levels at 4.26% support and 4.49% resistance.
- Dollar Spot – DXY: In a downtrend challenging the 200-day MA; key resistance at 104.93 with downside targets at 103.84 and 102.45.
- EURUSD: Direction uncertain post-TD sell; pivotal levels at 1.0818 resistance and 1.0754 support could determine the next moves.
- Gold: Strong bullish trend with TD 11 of 13 signaling upward continuation; next significant targets at 3,223 and 3,369.
S&P 500-SPX – Despite the recent counter-trend rally, the broader downtrend remains intact. We’re targeting 5479/65 initially, with a further potential drop to 5175. The failure to sustain above the 200-day moving average and the TD 5 of 13 indicator has bears in control. For investors, this rally offers a chance to sell at better prices. For traders, it’s time to prepare for new short positions. The trend is your friend-LOWER.
Nasdaq Composite-CCMP – Still trailing the 200-day (18,459). This counter-trend rally gives bulls hope; hope isn’t a strategy. A close below 17,691, with subsequent lower open/lower low/down close, would keep bears in control. Initial downside levels are 17,539 and then 16,807. Bulls need a definitive close above 18,721 and a solid break and sustain above 18,458. We are not there yet. Stay tuned
Dow Jones Industrial Average-INDU – TD 9 Sell, it’s still the strongest of the “Big Three”. The Dow is holding above the 200-day moving average. We’re on the lookout for a potential short-term pullback, with immediate support levels to watch at 42,116 and 41,953. The DeMark TD 9s send a mixed signal—confirming the upward trend, yet suggesting a possible 1-4-day retreat. It will be crucial to see if the Dow can maintain its grip on the 200-day moving average, unlike its peers. This will be a key test of resilience and could set the tone for market behavior in the near term. Stay tuned.
Euro Stoxx-SX5E – Yesterday’s close below critical support followed by a lower open/lower low/down close today would put bears in control. Watch 5271 for initial support, then 5251.
DAX-DAX Index – A break in the uptrend? The DAX has been consolidating since our TD 13 sells back in February. Yesterday’s close broke through support, and a lower close today puts bears in control. Initial support levels are at 22,080, followed by 21,585.
US Generic Govt 10 Yr Note-USGG10YR – Stuck in Purgatory. While the TD 4 of 13 suggests that, for now, yields might trend lower, we’re in a sort of limbo. Key levels to watch are support at 4.26% and resistance at 4.49%. A break in either direction could significantly shape the short-term trajectory. While the prevailing trend points to lower yields, we currently find ourselves in no man’s land, awaiting clearer signals.
Dollar Spot-DXY – Facing downward pressure with a rally to resistance. The DXY remains in a downtrend, yet it has managed to rally up to the 200-day moving average, currently facing resistance at 104.93. Despite this upward movement, our downside targets remain firm at 103.84, 102.45, and 99.08. The ability to sustain above or break through the 200 DMA will be crucial in determining the next directional moves.
EURUSD – Seeking direction amid tightening conditions. The TD 13-9 sell signal in March exerted significant pressure on the EURUSD, and the market is now searching for clear directional cues as conditions tighten. Current key levels to monitor include resistance at 1.0818 and support at 1.0754. A definitive break through either of these levels, accompanied by sustained follow-through, is likely to establish the next course of action.
Gold-GCA – Bullish trend continues with eyes on higher targets…Gold’s current positioning at a TD 11 of 13 highlights that bulls remain firmly in control of the market. The next targets are set at 3,223 and then 3,369. Buyers hoping for a pullback have found themselves left out in the cold as the market continues its upward trajectory without significant retracements.
