Analysis of US indices: Dow Jones, SP500, Nasdaq100, Nasdaq Composite and Nasdaq Biotechnology | The trader’s corner

Analysis of US indices: Dow Jones, SP500, Nasdaq100, Nasdaq Composite and Nasdaq Biotechnology

I have not updated my blog in Cinco Días for months. New paternity and my many professional commitments, as an investor or as a professor of Stock Market at the EF-Business School and at the General Stock Market have prevented me from doing so, with a crazy schedule, but I have decided to resume regular activity on this stock exchange website.

Today I bring an analysis of some of the main indices, of the most important stock market in the world. In addition, the US stock market, as I have been commenting in recent years, is the strongest stock market and is leading the rises in a very long upward cycle that began in 2009 and which is still underway for now.

It is true that the cycle is already mature and perhaps we must be more prudent than in 2011,2012,2013,204,2015, 2016 or 2017 where we were openly positive with North American equities. Nothing is eternal and this bull cycle will not be either, but as I always say we must enjoy it until there are clear and obvious signs of the end of the cycle.

To see what situation we find ourselves in we are going to analyze some of their main indices: the Dow Jones, the SP500, the Nasdaq100, the Nasdaq Composite and the Nasdaq Biotechnology

We begin this comprehensive review with the situation of the Dow Jones. We can see how the Dow is in a clear uptrend and maintains its good appearance. In fact, it is one of the few indices in the world that have pending activated bullish targets. As I have been commenting on previous analyzes, the Dow Jones has an upward target due to a triangular break towards 27,720 points approx and double bottom towards levels slightly above 28,000 points.

The uptrend has remained flawless since 2009 and has key support at annual lows (February and April) at 23,350 zonal points. As long as it does not lose this zone there will not be, as I repeat every week on various radii, any sign of weakness in the long-term trend.

In this October correction, it has generated intermediate support at 24,122 points.

We continue the review with the SP500. We can see how the index is in a clear and strong long-term uptrend since 2009 and at the moment we do not see signs of a change in trend, with the first key support at February lows at 2,532 points.

Some resistance at 2,940 points, the area of ​​highs in history where it drew a small double top, which warned of a short-term correction, which ended up taking place. It seems to be forming a clear medium-term bullish channel, which I indicate in blue and which perfectly contains the succession of the last rising lows and highs.

We continue with an analysis of the Nasdaq100, the strongest index in the US, which has led the rise since 2009. We can see how it has been in an uptrend since 2009. It has just suffered one of its biggest falls within the primary uptrend that has led these almost 10 years of uploads. Support at the previous rising lows, in April at 6322 points and in February at 6164 points.

The index warned of a short-term correction, forming a double top at 7,700 points, something that we not only warned all our clients, but also our thousands of followers on Twitter, in this Nasdaq100 analysis, and that finally brought a quick fix. Some intermediate support at October lows at 6574 points. In the current recovery it is lagging somewhat against the Dow Jones and it would be positive if it breaks back to the upside the area of ​​the 200-session average, which for the moment has simply gone flat.

I continue with an analysis of the Nasdaq Composite. We can see how it is in a clear long-term upward trend, since 2009, with first supports at the previous rising lows, at 6,805 points and 6,630 points. This index is more behind than the Nasdaq100 and it would be important for it to overcome the resistance that could be represented by the average of 200 sessions and the previous decreasing maximum, (of the short-term downtrend) at 7,670 points and where it also passes approximately 61.8% FIBO of the entire decline from all-time highs.

Some intermediate support at the October low, at 6,922 points. Losing them would be negative and would point to continuity in the correction. Its relative performance has clearly worsened against the Dow Jones this year.

And I finish the review of some of the main indices of the US stock market, with the Nasdaq Biotechnology. In this case, the situation is more delicate than in the previous cases. The index has not been able to beat during this year (unlike the others), the historical highs that it marked in 2015 and that is that some of its main components such as Regeneron Pharmaceuticals or especially Celgene, have suffered large falls.

It was very important that despite the collapse it suffered in October, with a very vertical drop, it was able to stop the fall for the 5th time in the last year, in the key support zone of 3160/3165 points. Losing them would confirm weakness for the medium term. It has another important support at 2514 points, the minimum of 2016. If we lose this level, we could end the long-term bullish cycle that began in 2009.

As resistance it has the area of ​​the average of 200, 61.8% of the last fall, in the area of ​​3,600 points, in the October highs, where it formed a small double top at 3,865 points and in the highs of 2015 and history at 4,194 points.

In summary, we have the main US indices in a clear long-term upward trend. It is true that there are certain difficulties to rise or greater weakness in the Semiconductor index (which we have not analyzed today) or in the Nasdasq Biotechnology, but at the moment there are no elements of judgment to consider the falls in October, as a change in trend, but for the moment they seem like a more short-term correction. Curiously, the strongest is the one that I have been mentioning in the Wednesday Seminars in recent months, the Dow Jones, which is the only one that has bullish targets activated and that seems ready to return to its highest ever again.

Despite the weakness of the European stock market or the sharp falls in the Chinese stock market, the North American stock market maintains its long-term upward trend intact. The reasons for greater caution come from other latitudes and we will see if the US stock market again pulls the others. We will continue to watch for possible alarms that warn us of the end of the cycle, but for now the indices have respected, as in previous corrections, the key levels.

This November 17, I will give in Madrid, 2 conferences during the Bull Market event. The event is free but places are limited. As always, it will be a pleasure to greet the hundreds of investors who usually attend these events in which I participate a couple of times a year in Madrid and in which I will collaborate with other professionals in the sector.You can sign up for free or consult more information HERE.

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David Galán


CEO of General Bag and Co-author of “The Little Book of Big Investors“Alienta Editorial (Grupo Planeta)

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