This news just expands the uncertainty in the markets. Technically, the damage has been done to the S&P 500 Index and the Nasdaq Composite Index. Both have fallen below their 200-day moving averages, which are viewed as bear market signals.
The Nasdaq Composite Index (currently at 16,550) fell below its 200-day moving average, currently at 18,452, in early March, but the 200-day moving average itself has not turned down. Nonetheless, the negative cross between the 50- and 100-day moving averages points to a weaker phase ahead.
A negative cross looks likely to materialise between the Nasdaq’s 50- and 200-day moving averages in the middle of April. However, a negative cross between the 100- and 200-day moving averages, the so-called dead cross, is unlikely till May if the Nasdaq stays below 18,450.
If the moving averages confirm the bearish phase, the target is likely to be at 15,533 assuming the Nasdaq Index has formed a bear flag and the index has fallen out of the bear flag.
See also: Test of STI 4,000 causes dark cloud cover; HSTECH’s corrective phase to continue
The S&P 500 Index’s chart pattern during the past six months resembles that of the Nasdaq. In the past six weeks the S&P 500 has also formed a bear flag, indicating a target of 5,152. The S&P 500 ended at 5,396 on April 4.
See also: S-REITs could finally rally as corrective phase sets in for mainland stocks
The Straits Times Index is also in a corrective phase following the dark cloud cover chart pattern on the candlestick chart during the last week of March. Following the dark cloud cover pattern, the STI moved below a minor support at 3,950 and is testing a neckline support at the 3,750 to 3,800. This area may well hold in the short term as the STI attempts to rebound off this level. On the flip side, the rebound could be part of a broader top formation, although it’s early days.
The corrective phase of the Hang Seng Tech Index, currently at 5,313, is likely to continue. Immediate support is at the 5,250 to 5,280 range. This index may remain pressured by further equity fund raising among its component stocks and the tariff war.
