DOW JONES, S&P 500, NASDAQ 100 – EQUITIES FIRST QUARTER TECHNICAL FORECAST
- Meaningful technical breakouts were lacking in Q1
- Key levels of support and resistance were reinforced
- Until these points are breached, a neutral view prevails
On the weekly setting, the Dow Jones experienced a relatively tame first quarter. The range was narrow, and prices were mostly flat heading into the final few weeks of Q1. This contrasted with a strong 15.5% showing in the final 3 months of 2022. Despite the tepid performance, there were key technical levels reinforced that remain crucial points to watch in the second quarter.
Starting with resistance, prices reinforced the 34246 – 35228 range. This was established in August and tested throughout the past few months. Meanwhile, key support appears to be the 23.6% Fibonacci retracement level at 32408, followed by the long-term rising trendline from 2020. So long as the Dow remains within these borders, the technical outlook remains neutral.
Pushing higher places the focus on the all-time high of 36832. Meanwhile, breaking under the trendline exposes the 28635 – 29543 inflection zone.
The S&P 500 fared better than the Dow Jones during the first quarter. On the weekly chart below, we can see that the index has been stabilizing since September. Similarly to the Dow, while meaningful technical progress was lacking, key levels of support and resistance were reinforced.
Starting with resistance, the 4180 – 4327 range was tested, but prices were unable to push meaningfully higher into it. At the same time, immediate support remains as a combination of the December 19th low at 3788 and the rising trendline from 2020. Clearing the latter places the focus on the 3502 – 3639 range. Until these key points are breached, the technical outlook remains neutral.
Compared to the Dow and S&P 500, the Nasdaq outperformed heading into the end of March. Prices were testing the mid-September high of 12987. Still, another layer of resistance remains above at 13740, which is the August 2022 high. Meanwhile, support is the combination of the rising trendline from 2020 and the 10484 – 11068 floor from the end of last year. Remaining within 13740 and 10484 would continue maintaining the neutral setting. Pushing higher exposes 14863 – 15268. On the other hand, dropping through support exposes the 78.6% Fibonacci retracement level at 8798.
— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com