With the exception of the Nasdaq, US indices recover previous levels following recent declines
Following investor fears of inflation in the US, which were reflected in the declines of the main US indices, it appears that calmness is gradually returning to Wall Street. With the exception of the Nasdaq, which was hit hardest, the main indices have recovered and are continuing their upward trend.
Investors’ fears were mainly demonstrated in the rise of 10-year bond yields. This caused Jerome Powell to attempt to downplay current risk of inflation during his address to congress in February, indicating that the US economy is still far from recovering and that he will continue to maintain his current stimulus programme.
This positive driver for the equity markets has been reinforced by congressional approval of the $1.9 trillion stimulus package which came into effect last week.
Turning towards Europe, we can observe that in the last few weeks we have seen positive macroeconomic data, such as the increase in German consumer confidence and good PMI data. This has supported the latest rises in the main European indices now that the future outlook is more and more positive due to the evolution of the pandemic and the vaccination process.
S&P500 Technical Analysis
Looking at the daily chart of the S&P500, we can see that the uptrend is still in place, after bouncing off the uptrend line after the last correction from its all time highs in the past, once the instability and uncertainty of the last few weeks, caused by the rise in bond yields, was overcome.
At the moment, the price is in an area close to its current resistance level - at the level of its historical highs (green). Therefore, we will have to see if the price is able to overcome this level and make new highs, or if it bounces downwards and possibly creates a double top formation.
If the price bounces downwards, it could look again for its first support level in the area coinciding with its trend line, the 18-session average (black) and the level of 3873 points. A break through this important point could open the door to a further pullback to its next support level at the area coinciding with its 200-session average and the red range.
As long as the uptrend remains in place any pullback could be used by investors to open long positions.
Source: Admirals (formerly Admiral Markets) MetaTrader 5 - SP500 Daily Chart. Date Range: 13 November 2019 - 15 March 2021. Date Captured: 15 March 2021. Past performance is not necessarily an indication of future performance.
Price evolution of the last five years:
- 2020: 15.05%
- 2019: 29.09%
- 2018: -5.96%
- 2017: 19.08%
- 2016: 8.80%
Technical Analysis DAX30
In the last few months, the DAX30 has maintained a clear upward trend that increased after breaking through the upper band of the green side channel that acted as its main resistance in a strong sideways movement between July and mid-December.
This breakout led to historical highs, that the price respected during the months of January and February in a sideways movement. This sideways movement was finally overcome on 8 March, as can be seen in the daily chart, after supporting itself on its 18-period moving average, which has made it possible to trade at historical highs.
Currently, the meeting point of the 18-session moving average and its previous resistance level act as its main support. As long as we do not lose this important level, the long term trend remains bullish, so as with the SP500, any pullback can be used by investors to open long positions.
Source: Admirals MetaTrader 5 - DAX30 Daily Chart. Date Range: 1 November 2019 - 15 March 2021. Date Captured: 15 March 2021. Past performance is not necessarily an indication of future performance.
Price evolution of the last five years
- 2020: 3.6%
- 2019: 25.48%
- 2018: -18.26%
- 2017: 12.51%
- 2016: 6.87%
Technical Analysis NQ100
As we mentioned earlier, the technology index has been the most badly affected after recent falls. This is because the increase in the cost of financing has a large impact on the perception of future profits by investors..
Rising bond yields may also attract investors' attention as they are more attractive and also perceived as a safer investment, leading for some to a rotation out of stocks and into bonds.
Technically speaking, after making all-time highs, the NQ100 retraced to the 50% fibonacci level of the last upward momentum, where it seems to have formed a floor to continue its uptrend and once again reach an area close to 13,000 points near its 18-session average in black which currently acts as the main resistance.
It is very important to see if the price is able to overcome this level and reach its next resistance level in the green band. A bullish break above this level would open the door to an attempt to attack its all-time highs.
Source: Admirals MetaTrader 5 - NQ100 Daily Chart. Date Range: 10 December 2019 - 15 March 2021. Date Captured: 15 March 2021. Past performance is not necessarily an indication of future performance.
Price evolution of the last five years:
- 2020: 43.64%
- 2019: 35.23%
- 2018: -3.88%
- 2017: 28.24%
- 2016: 7.50%
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Depicted: Admirals Premium Analytics - NQ100
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