Technical Analyst, Saxo Bank
S&P 500 closed yesterday above the Ichimoku Cloud (shaeded area) and has established a short-term uptrend (higher high and higher low).
The only thing nmissing is that RSI is closing back above the 60 threshold—circled. If that occurs, the uptrend is further confirmed.
If confirmed, S&P 500 could push higher to 5,383–5,457, which are the 1.382 and 1.618 Fibonacci projections respectively, i.e., approximately 3-6% from current levels.
If RSI fails to close above 60, the uptrend could be cancelled and reversed. S&P 500 could slide back to test key strong support at around 4,953.
An indication of this scenario to play out—after RSI has been rejected at 60—would be an RSI close below its lower rising trendline.
Nasdaq 100 seems to be building an uptrend but must close above the Ichimoku Cloud (shaded area) and the RSI closing above the 60 threshold to confirm it.
If that occurs, there is upside potential to 19,035.
However, if those two technical indicators do not confirm the uptrend and Nasdaq 100 instead slides back, a daily close below 17,800 could fuel a sell-off down to strong support at around 16,963.
US NAS100 CFD seems to be rejected at the upper part of the Cloud, and RSI seems to be rejected at the key threshold at 60.
If US NAS100 closes back below 17,780, a sell-off could push it back down to key support at around 16,965.
2024: The wasted year
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.