S&P 500, Nasdaq 100 Forecast: Bullish
- US stocks finish the week strong, printing a fresh yearly high
- Nasdaq nears full recovery of major 2022 decline
- Wall Street banks and Tech Stocks Tesla and Netflix get earnings season underway
- The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library
US Stocks Finish the Week Strong, Printing a Fresh Yearly High
Both the S&P 500 and Nasdaq 100 printed new yearly highs this week as progress on core inflation was enough to trigger a broader equity rally and bullish continuation after last weeks lower close. With core inflation surprising to the downside, printing at 4.8% vs estimates of 5%, markets are growing more confident that prior hikes are having an effect on the real economy – seeing little need for further tightening beyond July.
On Friday, Wall Street banks revealed solid earnings results for Q2 with JP Morgan and Wells Fargo beating estimates. When it comes to earnings, markets tend to be largely focused on the actual figure vs the forecast and less concerned about whether or not the actual print represents a significant drop from the prior quarter or the same quarter one year ago.
S&P 500 Key Technical Levels to Consider Ahead of Corporate Earnings
The S&P 500 has been on an impressive run and despite it nearing overbought territory on the weekly chart, there appears little reason to anticipate a reversal from here. Positive economic data is likely to have had an effect on corporate earnings which tends to support the index.
An important confluence zone of resistance is the next hurdle to overcome if the current trend is set to continue. The confluence zone of resistance comprises of the 4528 level (the 78.6% Fibonacci retracement of the major 2022 decline), the 4550 level and the upper side of the ascending channel. Technically the uptrend will remain even if prices pullback below 4327.50, but the above-mentioned zone of resistance holds the key to whether the advance continues at the current pace. Support can be seen at the zone between 4309.25 and 4327.50.
S&P 500 (E-Mini Futures) Weekly Chart
Source: TradingView, prepared by Richard Snow
This week, mega-cap tech stocks perked up noticeably with some of the clear front runners like Nvidia and Meta and Tesla all seeing their share prices appreciate. Next week Wednesday after market close Tesla and Netflix are scheduled to release their trading statement for Q2.
Mega-cap Tech Stock Performance Year-to-Date
Source: Refinitiv, prepared by Richard Snow
Nasdaq Nears Full Recovery of the Major 2022 Decline
The broad picture of the Nasdaq is not too dissimilar to that of the S&P 500, although the Nasdaq has been the darling of the US indices throughout this recovery and continues hold that title. In fact, the Nasdaq has a pretty clean run if it is going to retest the all-time high with little in the way of resistance. The index has already risen above a zone of resistance around 15,260 and 15,423 to eye the upper side of the ascending channel.
The Nasdaq continues its multi-week run within overbought territory and does not appear to be making any attempt to change that. In the event prices do trade lower from here, support comes in at 15,423 and 15,260.
Nasdaq (E-Mini Futures) Weekly Chart
Source: TradingView, prepared by Richard Snow
Earnings Season Welcomes Big Tech Next Week
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