US EQUITIES TALKING POINTS:

FORECAST: NEUTRAL

• US Equities Loved a Sturdy Week with Fridays Losses Proving the one Blip. Can the Rally Proceed?
• Nasdaq 100 Appears Ripe for a Retracement Supported by the 14-day RSI now in Overbought Territory.
• US Debt Ceiling Developments Key to Additional Upside in US Equities.

READ MORE: Debt Ceiling Blues, Half 79. What Occurs if the US Defaults?

US INDICES WEEK IN REVIEW

US indices completed with considerably of a whimper on Friday given the spectacular rally this week. Markets opened the week with a wee little bit of warning because the US debt ceiling shadow saved market members on edge.

The S&P 500, Nasdaq 100 and Dow Jones benefitted nonetheless, as optimistic information across the debt ceiling and a possible deal started to flow into. This helped total sentiment and danger belongings specifically as a deal seemed potential by Sunday night as talked about by Republican Home Rep. Kevin McCarthy. As Fridays US Session kicked into gear nonetheless, we heard from GOP debt restrict negotiator Graves who mentioned talks are at a pause because the “White Home is being unreasonable”. These feedback might clarify the lackluster finish to the week which noticed all three US indexes closed in destructive for the day, leaving the door open to some uncertainty heading into subsequent week.

SOURCE: SYZ Group

Many analysts have been cautious in regards to the latest strikes in US indices. Quite a lot of this stems from the uneven beneficial properties being seen with giant cap Tech shares seen driving the rally. Taking a fast have a look at Meta and Nvidia, who’re up over a 100% this 12 months and being a part of the highest 8 largest shares within the SP500. An indication as soon as extra that megacap tech has been the primary supply of power throughout the latest rally. These corporations amongst others who present software program and {hardware} elements to the burgeoning discipline of synthetic intelligence have been the largest gainers up to now and the rationale for a cautious outlook.

S&P 500, NASDAQ 100 AND DOW JONES FORECAST FOR THE WEEK AHEAD

Inventory indices face an attention-grabbing week because the US debt ceiling talks are more likely to reached fever pitch whereas we even have some attention-grabbing danger occasions which might come into play as properly. Blended messaging towards the tip of the week additionally threatens to spillover, with US Indices more likely to really feel the pressure. Feedback from Treasury Secretary Janet Yellen on Friday hinted that the banking sector turmoil is probably not over as she acknowledged that extra financial institution mergers could also be mandatory. These feedback dovetailed with Fed Chair Jerome Powell who struck a fairly dovish tone in his feedback on Friday which noticed fee hike expectations for June decline from across the 40% mark all the way down to 22% in what must be seen as a optimistic for the inventory market. We do have the FOMC minutes within the week forward and this might present us with extra readability on the Federal Reserve’s rationale shifting ahead.

Nonetheless, the debt ceiling deadlock appears to be the primary driver of markets in the mean time. All the pieces from the US greenback to Bond yields and commodities are feeling pressure in some type or one other. Provided that the GOP negotiator walked out on Friday, markets will little question begin the brand new week on a cautious word taking a look at how talks and negotiations unfold and their ensuing influence on total market sentiment. I nonetheless imagine a deal on the US debt ceiling will likely be reached earlier than the deadline as has been the case prior to now.

ECONOMIC CALENDAR FOR THE WEEK AHEAD

The week forward on the calendar seems productive from a US perspective with 4 ‘excessive’ rated knowledge releases, and a bunch of ‘medium’ rated knowledge releases (together with a bunch of Fed Audio system).

Listed here are the 4 excessive ‘rated’ danger occasions for the week forward on the financial calendar:

• On Tuesday, Could 24, we’ve the FOMC Minutes Launch due at 18h00 GMT.
• On Thursday, Could 25, we’ve the GDP Progress Price QoQ (2nd Estimate) knowledge due at 12h30 GMT.
• On Friday, Could 26, we even have the Feds most well-liked gauge of inflation the Core PCE Worth Index knowledge due at 12h30 GMT.
• On Friday, March 31, we shut out the week with the Michigan Shopper Sentiment (last) at 14h00 GMT.

For all market-moving financial releases and occasions, see the DailyFX Calendar

Fairly a busy week for the financial calendar from a US perspective with inflation knowledge within the type of the PCE worth index more likely to be the largest occasion. Given the quantity of Fed converse over the previous week and the week forward I don’t count on the FOMC minutes to offer any notable shocks. Earnings season continues on Monday with a bunch of US corporations reporting subsequent week. The most important names nonetheless will likely be Zoom video on Monday and naturally Nvidia on Wednesday with each earnings releases anticipated after market shut.

TECHNICAL OUTLOOK

S&P 500 Day by day Chart

Supply: TradingView, ready by Zain Vawda

From a technical perspective the S&P has lastly reached the top quality between 3800 and 4200 earlier than retreating barely forward of the weekend. The 4200 deal with has confirmed a very powerful nut to crack over the previous 18 months. A deal on the US debt ceiling might facilitate a sustained break larger with rapid resistance across the 4250 and 4320 handles coming into play. There’s a risk given the uncertainty heading into the brand new week which might facilitate a pullback earlier than the bull’s return, which might convey rapid assist at 4135 into focus. Any additional draw back and 4100 and the and the 100-day MA at 4043 turn out to be areas of focus.

NASDAQ 100 Day by day Chart

Supply: TradingView, ready by Zain Vawda

The Nasdaq 100 as talked about earlier continues to be standout performer of late since printing a low across the 11686 mark on March 13 (which was additionally the swing excessive on January 18). Round that point, we had a golden cross with the 50-day MA crossing above the 200-day MA and the each day candle bouncing of the 100-day MA all hinting on the latest upside rally from a technical perspective.

This previous week did see us print a contemporary YTD excessive simply shy of the psychological 14000 deal with with Friday seeing the Nasdaq report its first bearish shut this week. The Nasdaq may be in want of a catalyst to clear the psychological 14000 stage whereas the 14-day RSI can be in overbought territory. I do suppose that just like the SP500 Nasdaq could also be in for an early week retracement forward of any potential deal on the US debt ceiling.

Key Ranges to Maintain an Eye On:

Help Ranges:

• 13700
• 13450
• 13021 (50-day MA)

Resistance Ranges:

— Written by Zain Vawda for DailyFX.com

Contact and observe Zain on Twitter: @zvawda