Weekly Lookout of US Markets – 21-Oct-2019

Updated: Dec 6, 2019

· Failing the shooting star candle that was formed in prior week, the main indices inched upwards towards significant supply area near all time high

· The indices were bounced back from the supply area, but this rejection was not as strong as earlier rejection from the same area

· DJI is seen weakest among SPX, NDX and DJI.

· The volume of respective ETFs – SPY, QQQ and DIA have shown sharp decline on weekly chart while the prices crawled higher, confirming weakened uptrend near supply area.

Last week the SPX opened higher than previous week’s close, and crawled higher, failing the shooting start candle that was formed in earlier week. However for most of the week it was rangebound, ending the week close to where it opened the week. The supply zone at 3005-3020, that has been tested twice earlier, rejected SPX this time, but with less strength than was seen in previous retests.

S&P 500 Daily Chart

The other markets – NDX and DJI showed similar behavior. DJI appears a little weaker than the other two, given the peak it hit during the week. However when we look at the highlighted price action (within blue rectangle) we see that the market was rangebound between the supply area in respective markets on the upside, and the gap formed during previous week on the downside.

NASDAQ Daily Chart

Dow Jones Industrial Average Daily Chart

On a shorter timeframe – we see a few intermediate demand zones in hourly chart that would act as lower boundaries, while the higher timeframe supply zone will act as the upper bound during the week.

S&P 500 Hourly Chart

Outlook ahead

Expectation for the week is – the markets are likely to continue sideways unless there is any unexpected news/ shock. There are plenty of earning announcements, notably from big ones such as AMZN, which may have impact on daily market movements.

For Monday – if the market opens above 3000 level, we can expect it to move further up to retest the top of the supply area upto 3020. If the market starts trading below 2975, we have immediate demand zones 2963 – 2970 and next one below the gap at 2928-2940. Both these are expected to act as near term demand zones that can cause a bounce.