After a week-long rally, multiple equity indices are hitting upon their range resistance levels. The Nasdaq Composite Index, for instance, is challenging the pattern of falling highs near 7,500. And for DJIA, 26,000 proves to be a tough level to crack. The index ventured above this level early last month but failed to hold.
For the bellwether S&P 500 Index, the index is pushing against the ceiling at 2,800. It rallied above this level twice but did not sustain the advance (see below).
At these big round-number technical levels, setbacks are to be expected. But the wider question is this: Are these indices ready for another leg up, possibly to new highs?. In yesterday’s post, I listed three critical factors which may help the bulls’ cause, which are a) corporate profits, b) rates/energy, c) US-China trade war.
The last two factors, previously a drag on the economy, are thawing. In particular, US rates appear to be falling. The 10-year yield breached the 3% key level of late – a stark reversal of the spike up in October (see below). This may help to sustain the recovery rebound in US equities.
The above references the authors opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds. Jackson’s expertise include global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research. Jackson has a PhD in Finance from Durham University.