S&P 500, Nasdaq 100 Attempt Bounce Off of Resistances: Key Levels to Watch

  • Stock Market Analysis
  • Editor's Pick
  • Investors brace for uncertainty in the markets as geopolitical tensions loom and earnings season kicks off.
  • Index futures are in the green for now but markets could resume yesterday's selloff if Mideast tensions keep rising.
  • A technical analysis of the S&P 500 and Nasdaq 100 reveals divergent patterns - let's take a look at each one by one.
  • In 2024, invest like the big funds from the comfort of your home with our AI-powered ProPicks stock selection tool. Learn more here>>

Over the weekend, Tel Aviv reported that their missile defense system successfully neutralized 99% of Iran's aerial assault, but unfortunately, a 7-year-old girl was injured by shrapnel.

The big question now is how Israel will retaliate and whether this conflict will escalate into a full-scale war. In such a scenario, the stock market may experience a pullback, which is typical when there's uncertainty in the air.

Investors will also be closely watching companies' quarterly results as the earnings season for the first quarter kicks off.

These reports, along with forecasts for future quarters, will determine whether major US stock market players can sustain their growth, a key factor in the ongoing bull market.

Amid rising geopolitical tensions and imminent earnings, let's take a technical view of the S&P 500 and Nasdaq 100 indexes.

S&P 500 - Price Channel Suggests Corrective Movement

The S&P 500 is experiencing a noticeable rebound. Given the current movement structure and subdued dynamics, it appears to be more of a correction than a definite trend reversal.

The strength of bearish sentiment will be tested if the index approaches the cluster of support levels around 5120 and 5060 points. S&P 500 Chart

If sellers break through this area, it could signal a shift from correction to a downward trend, with the initial target around 4800 points.

Deep declines might occur if there's a real escalation of conflict in the Middle East and if companies report poor quarterly results.

Nasdaq 100: What's Next After the Diamond Formation?

The Nasdaq 100 appears to be in a diamond formation, unlike the S&P 500, which has experienced clear corrections.

The Nasdaq's growth has slowed down, moving sideways and forming this pattern. The crucial factor will be the breakout direction. If the bottom of the formation is breached, it will likely favor the sellers, at least in the short term. Nasdaq Technical Chart

If the supply side dominates, prices could drop to at least the round support level of 17,000 points. Conversely, a breakout above suggests a desire to continue the uptrend, potentially reaching historical highs near 19,000 points.

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Disclaimer: The author does not own any of these shares. This content, which is prepared for purely educational purposes, cannot be considered as investment advice.

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