“Cracking the Code: Decoding Nasdaq 100 & S&P 500 Trends” | DK

DK
6 Apr 202417:26

TLDRThe recent US stock market correction, despite a continued bullish trend, has been analyzed in detail. Technical analysis of the NASDAQ 100, S&P 500, and Dow Jones Industrial Average indices suggests potential support and resistance areas. Market sentiment, as indicated by the fear and greed index and put-call ratio, reflects a neutral to slightly bullish stance. Volatility, measured by the VIX, has increased significantly. The video also discusses the historical price action and potential future targets for these indices, highlighting key areas to watch for traders and investors.

Takeaways

  • 📉 The US stock market experienced a significant correction last week, with the Dow Jones Industrial Average index being the worst performer with a 2.27% drop.
  • 📈 Despite the correction, the bullish trend remains intact for the US stock market as a whole.
  • 📊 Technical analysis of the NASDAQ 100, S&P 500, and Dow Jones Industrial Average indices was conducted to determine support and resistance areas.
  • 📈 NASDAQ 100 marginally outperformed the broader market index S&P 500 by correcting by 8%.
  • 📊 The fear and greed index for the S&P 500, representing the broader US stock market, currently reads at 61, indicating a minor deterioration in market sentiments but still in the green zone.
  • 📉 The put-call ratio indicates a neutral market sentiment, with the 5-day average value at 0.8, which is less than 1.
  • 🔍 The volatility index (VIX) has increased substantially, indicating higher expected price fluctuations over the next 30 days.
  • 📉 S&P 500 experienced a bearish week, closing at 5,243.3, and a bearish engulfing candlestick pattern was formed.
  • 📈 The long-term target for S&P 500 based on a rounding pattern breakout is between 5,743 and 6,418.
  • 📈 NASDAQ 100 has a potential to reach targets of 21,900 to 22,000 in the long term, with an even higher potential of 26,000.
  • 📉 Dow Jones Industrial Average has a potential support area at 38,500 to 38,650, with a critical resistance area at 39,500 due to the existence of a gap.

Q & A

  • What was the overall trend of the US Stock Market in the last week mentioned in the transcript?

    -The US Stock Market witnessed a sizable correction in the last week, with the S&P 500, NASDAQ 100, and Dow Jones Industrial Average all experiencing a decline.

  • Which index performed the worst in the US Stock Market during the week discussed in the transcript?

    -The Dow Jones Industrial Average index performed the worst, with a correction of 2.27% on a week-to-week basis.

  • What does the fear and greed index indicate about the prevailing sentiments in the US Stock Market according to the transcript?

    -The fear and greed index, with respect to the S&P 500, reads at 61, indicating that the market is in the green zone, but there is a minor deterioration in market sentiments compared to the previous week when it read 69.

  • How does the put-call ratio reflect the market sentiment based on the 5-day average mentioned in the transcript?

    -The 5-day average put-call ratio indicates that the market is in a neutral territory, as its value is at 0.8, which is less than 1.

  • What does the VIX index measure and what was its behavior in the last week according to the transcript?

    -The VIX index measures the expected price fluctuations or volatility in the S&P 500 Index options over the next 30 days. In the last week, the volatility of the market, as indicated by the VIX, has gone up substantially higher.

  • What is the significance of the bearish engulfing candlestick pattern mentioned for the S&P 500 index?

    -The bearish engulfing candlestick pattern signifies a potential trend reversal from bullish to bearish. However, in this case, the pattern was followed by a large lower shadow, indicating that buying pressure eventually came in and the bulls fought the bears.

  • What is the immediate support area for the S&P 500 index as discussed in the transcript?

    -The immediate support area for the S&P 500 index is between 5,175 to 5,178, as identified by the price action in the daily price chart.

  • What is the long-term target calculated for the NASDAQ 100 based on the rounding pattern breakout discussed in the transcript?

    -The long-term target calculated for the NASDAQ 100 based on the rounding pattern breakout is around 21,900 to 22,000, with potential to go even higher to 26,000.

  • What is the potential resistance area for the Dow Jones Industrial Average index identified in the transcript?

    -The potential resistance area for the Dow Jones Industrial Average index is between 39,420 to 39,492, where a gap exists and is expected to provide significant resistance on an upside move.

  • What is the next potential target for the NASDAQ 100 if it breaks out of the current range?

    -If the NASDAQ 100 breaks out of the current range, the next potential target is 18,700, and then it could possibly move to 18,930.

  • What does the transcript suggest about the overall market structure for the US Stock Market?

    -The overall market structure for the US Stock Market, as suggested by the transcript, indicates higher highs and higher lows, showing a bullish trend.

Outlines

00:00

📉 US Stock Market Correction and Technical Analysis

The US Stock Market experienced a significant correction last week, with the NASDAQ 100 outperforming the S&P 500 and Dow Jones Industrial Average. The fear and greed index indicates a minor deterioration in market sentiment, but remains in the green zone. The put-call ratio and VIX index suggest a neutral to bearish market sentiment due to increased volatility. Technical analysis of the S&P 500 index shows a bearish close with potential support and resistance levels identified based on historical price actions and chart patterns.

05:02

📈 S&P 500 and NASDAQ 100 Breakout and Price Chart Analysis

The S&P 500 index had a breakout from a rounding pattern with a long-term target of 5,743 and a potential to reach 6,418. A bearish engulfing candlestick pattern was formed last week, but buying pressure and an inside bar indicate a loss of downside momentum. The NASDAQ 100 also showed a breakout from a rounding pattern with a historical all-time high, suggesting a bullish trend. Immediate support and resistance levels are identified, with a focus on the price action and chart patterns indicating potential targets for the upcoming week.

10:03

🌟 NASDAQ 100 and Dow Jones Industrial Average Technical Outlook

The NASDAQ 100's price action has been struggling with resistance levels, but a Morning Star formation suggests support at 17,764. A gap at 17,482 provides additional support, and the market structure indicates higher highs and lows. The Dow Jones Industrial Average has seen a massive fall, but a consolidation area and support at 38,500 indicate a potential reversal. The daily price chart shows a double top formation with a measured depth already attained, suggesting a potential upside move if the resistance area is taken out.

15:04

🔮 US Stock Market Outlook and Potential Targets

The technical analysis of the US Stock Market suggests a mixed outlook for the upcoming week. The S&P 500 index has identified demand and supply areas, with potential targets based on price action and chart patterns. The NASDAQ 100 maintains a bullish structure with immediate support and resistance levels, and a long-term potential target. The Dow Jones Industrial Average shows signs of a good support level with a strong resistance area, and a potential target if the resistance is overcome. The video concludes by inviting viewers to share their thoughts on the market's direction in the comments section.

Mindmap

Keywords

💡Technical Analysis

Technical analysis is a method used to forecast the future price movement of financial instruments, such as stocks, by evaluating historical price data and identifying patterns. In the video, technical analysis is applied to the NASDAQ 100, S&P 500, and Dow Jones Industrial Average indices to determine support and resistance levels, which are key in understanding potential market behavior. The analysis includes examining price charts, candlestick patterns, and other technical indicators to predict future market trends.

💡Support and Resistance

Support and resistance are levels on a price chart that represent where a stock or index has historically had difficulty moving above (resistance) or below (support). These levels are significant in technical analysis as they can indicate potential areas of price reversal or breakout. In the context of the video, the presenter is using technical analysis to determine these levels for the NASDAQ 100, S&P 500, and Dow Jones Industrial Average to forecast future market behavior and potential trading opportunities.

💡Fear and Greed Index

The Fear and Greed Index is a measure that tracks the sentiment of the market, reflecting the prevailing emotions of investors. It typically ranges from 0 (extreme fear) to 100 (extreme greed), with a value above 50 indicating greed and below 50 indicating fear. In the video, the Fear and Greed Index is used to gauge the current mood of the US stock market, particularly in relation to the S&P 500, to understand whether investors are generally optimistic or pessimistic about the market's direction.

💡Put-Call Ratio

The put-call ratio is a market indicator that measures the number of put options to call options traded. It is often used as a sentiment indicator, with a higher ratio suggesting bearish sentiment and a lower ratio suggesting bullish sentiment. In the video, the 5-day average put-call ratio is examined to determine the market's sentiment towards the S&P 500 Index, with a value less than one indicating a neutral to bullish sentiment.

💡Volatility Index (VIX)

The Volatility Index, or VIX, is a measure of the stock market's expected volatility over the coming 30 days. It is often referred to as the 'fear index' because it tends to rise when investors are fearful of market declines. The VIX is calculated based on the prices of put and call options on the S&P 500 Index. In the video, the VIX is used to analyze the level of market volatility and investor fear, with a rise in the VIX indicating increased market uncertainty and potential price fluctuations.

💡Rounding Pattern

A rounding pattern in technical analysis refers to a price chart formation that resembles a rounded hill, indicating a period of consolidation before a potential breakout. It is characterized by a series of higher lows followed by a series of lower highs, forming a rounded pattern. The rounding pattern is often considered a continuation pattern, suggesting that the market will continue in the direction of the previous trend after the breakout. In the video, the presenter discusses the identification of a rounding pattern in the S&P 500 Index and its implications for future price movements.

💡Bearish Engulfing Pattern

A bearish engulfing pattern is a candlestick pattern that signals a potential reversal in an uptrend. It occurs when a small bullish candle is followed by a larger bearish candle that 'engulfs' the previous candle, indicating that sellers have taken control of the market. This pattern is considered bearish as it suggests that a downtrend may follow. In the video, the presenter identifies a bearish engulfing pattern in the context of the US stock market indices, which could indicate a potential shift in market sentiment.

💡Inside Bar

An inside bar is a trading pattern in which a smaller candlestick is completely enclosed within the body of a larger candlestick from the previous time period. This pattern often indicates indecision in the market and a potential pause in the current trend. It can be used by traders to identify potential areas of consolidation or reversal. In the video, the inside bar pattern is mentioned as a sign of a loss of downside momentum, suggesting that after a significant price drop, the market may be stabilizing or preparing for a potential reversal.

💡Market Structure

Market structure refers to the overall pattern and trend of the price movement in a financial market. It includes the identification of higher highs and higher lows in an uptrend or lower highs and lower lows in a downtrend. Analyzing market structure helps traders and investors understand the current market conditions and make informed decisions. In the video, the presenter discusses the market structure of the US stock market indices, noting that despite corrections, the overall structure remains bullish with higher highs and higher lows.

💡Breakout

A breakout in technical analysis refers to a situation where the price of a security moves beyond a previously established resistance level or support level. Breakouts can signal the start of a new trend or the continuation of an existing one. They are significant events as they can lead to increased trading activity and potential price movements. In the video, the concept of breakout is used to analyze the historical and potential future price action of the indices, with the presenter discussing breakouts from rounding patterns and resistance levels.

💡Double Top

A double top is a bearish reversal pattern in technical analysis that appears on a price chart and indicates a peak in the price of an asset. It is formed when the price reaches a high point, pulls back, and then rises again to the same high point before falling again. This pattern suggests that the asset has failed to continue its upward movement and may be preparing to enter a downtrend. In the video, the presenter identifies a double top formation in the Dow Jones Industrial Average index, which could indicate a potential bearish trend for this index.

Highlights

The US Stock Market experienced a sizable correction last week, but the bullish trend remains intact.

Technical analysis of NASDAQ 100, S&P 500, and Dow Jones Industrial Average index is conducted to determine support and resistance areas.

NASDAQ 100 corrected by 8%, marginally outperforming the broader market index S&P 500.

Dow Jones Industrial Average index was the worst-performing index with a 2.27% correction.

The fear and greed index for S&P 500 currently reads at 61, indicating a minor deteroration in market sentiments but still in the green zone.

The 5-day average put call ratio indicates the market is in a neutral territory.

Volatility, measured by the VIX, has substantially increased, indicating the market is in an extreme fear zone.

S&P 500 Index closed bearishly at 5,243.3, showing a trend reversal from a rounding pattern.

The first target for S&P 500 based on rounding pattern is 5,743, with potential to reach 6,418.

A bearish engulfing candlestick pattern was formed in the last week, but with a large lower shadow indicating buying interest.

NASDAQ 100's all-time high breakout indicates a very bullish overall structure with potential targets at 21,900 to 22,000 and possibly 26,000.

Immediate resistance for NASDAQ 100 is at 18,340 to 18,450, with support at 17,764.

Dow Jones Industrial Average has a potential long-term target of 42,500 and possibly 46,500 based on rounding pattern.

38,500 to 38,650 becomes a good support area for Dow Jones Industrial Average.

39300 acts as an intermittent resistance for Dow Jones Industrial Average, with a stronger resistance at 39,420 to 39,492.

Once any candle closes above 39,500, there is a chance of an upside move in Dow Jones Industrial Average.

The next potential target for Dow Jones Industrial Average is 40,600, subject to taking out the important resistance area.

The video invites viewers to share their thoughts on whether the market will be bullish or bearish in the upcoming week.

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