U.S. Stock Indices Show Correction Potential
The U.S. Corporate reporting season is gathering up steam. Goldman Sachs and the Bank of New York will report on Monday amid Martin Luther King Day Celebrations in the United States. Alcoa, the Bank of America, and Morgan Stanley will join the reporting fever on Tuesday followed by Netflix on Wednesday.
However, the first corporate reports released last week disappointed investors, adding some more reasons for American stock indices to decline. U.S. stock indices are going down after both the Dow Jones and S&P 500 broad market indexes posted all-time highs on January 5.
The Dow Jones index is running inside the upward channel that started on December 1, 2021 and is hitting the support line of this channel for the third time. So far, the support area of 35600-35650 is holding its ground, but it may not hold the pressure in the next downside attempt. In this case Dow Jones may plummet to the 34470-34500 area.
The S&P 500 index follows almost the same pattern as it scales back to the support line of the upward trend that began on October 1, 2021. Its sustainability is questionable as “bears” are attacking this support for the fifth time. If the index dives below the 4600 points support level it may see a downside potential to the 4370-4380 area.
Nasdaq 100, a U.S. hi-tech index, has left the upward channel that was being recorded since March 2021. The index is trading below its moving averages EMA21 and EMA55 on the daily chart, indicating a further downside preference. The nearest support level is at the 14220-14250 area.
Therefore, even better than expected corporate reports this week would not guarantee an upside move of the indices. Currently U.S. stock indices are in shallow waters and this could trigger a 4% downside fall if the current support levels are surrendered.
However, the first corporate reports released last week disappointed investors, adding some more reasons for American stock indices to decline. U.S. stock indices are going down after both the Dow Jones and S&P 500 broad market indexes posted all-time highs on January 5.
The Dow Jones index is running inside the upward channel that started on December 1, 2021 and is hitting the support line of this channel for the third time. So far, the support area of 35600-35650 is holding its ground, but it may not hold the pressure in the next downside attempt. In this case Dow Jones may plummet to the 34470-34500 area.
The S&P 500 index follows almost the same pattern as it scales back to the support line of the upward trend that began on October 1, 2021. Its sustainability is questionable as “bears” are attacking this support for the fifth time. If the index dives below the 4600 points support level it may see a downside potential to the 4370-4380 area.
Nasdaq 100, a U.S. hi-tech index, has left the upward channel that was being recorded since March 2021. The index is trading below its moving averages EMA21 and EMA55 on the daily chart, indicating a further downside preference. The nearest support level is at the 14220-14250 area.
Therefore, even better than expected corporate reports this week would not guarantee an upside move of the indices. Currently U.S. stock indices are in shallow waters and this could trigger a 4% downside fall if the current support levels are surrendered.
