Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Stocks

Stock Market Indexes and Fibonacci Retracements: Will the Nasdaq Push Through Key Level?

by December 1, 2022
December 1, 2022
Stock Market Indexes and  Fibonacci Retracements: Will the Nasdaq Push Through Key Level?

Smaller rate hikes were music to investors’ ears. After two down days and what looked like it could have stretched to three days, the markets pulled a quick reversal and came roaring back after Fed Chairman Powell’s speech at the Brookings Institution.

If you were following the markets on Wednesday, you’d know that during the first half of the trading day, the S&P 500 Index ($SPX), Dow Jones Industrial Average ($INDU), and the Nasdaq Composite ($COMPQ) were trading lower. But after Chairman Powell mentioned that the pace of interest rate increases could moderate starting in December, investors felt more at ease.

Investors took the “Don’t Fight the Fed” adage seriously. The stock markets spiked on the news. Yesterday, the three broader indexes closed at their highs—$SPX at 4080.11, $INDU at 34,589.77, and $COMPQ at 11,468. Treasury yields, the U.S. dollar, and the Cboe Volatility Index ($VIX) moved lower (more on the $VIX later). The fall in the U.S. dollar gave a boost to precious metals, with gold and silver moving to the upside.

Fibonacci Levels and Moving Averages

If you remember, last week we mentioned that the 200-day simple moving average (SMA) would act as a strong resistance level for the $SPX. Now that the index has crossed above that level, we’ll have to see if there’s enough of a follow-through to take it up to the 4200 level—a key Fibonacci retracement level—or if this is a reactionary move.

The core personal consumption expenditure (PCE) index, an inflation gauge the Fed favors, came in softer than expected. This could help extend yesterday’s stock market rally. If the rally continues, one thing to watch for is the slope of the 200-day SMA. It’s still sloping downward and if starts flattening out, that could be a positive indication of a rally.

On Wednesday, all 11 S&P sectors were in positive territory with Technology leading followed by Communication Services and Consumer Discretionary. This can be seen in the performance of $COMPQ, which got some much-needed attention. Since mid-October, out of the three U.S. broader indexes, the $COMPQ was the laggard with Technology and Communication Services often being the lowest-performing sectors. But on Wednesday, after Powell’s comments, $COMPQ popped.

Looking at the weekly chart of $COMPQ, using March 2020 low and November 2021 high to draw the Fibonacci levels, you can see the index is trying to push through the 50% Fibonacci retracement level (see chart 1).

CHART 1: NASDAQ FACING RESISTANCE FROM FIBONACCI RETRACEMENT LEVEL. $COMPQ is trying to catch up with the $SPX and $INDU as it tries to battle through the 50% Fib retracement level. Chart source: StockChartsACP from StockCharts.com. For illustrative purposes only.

If you switch over to the daily chart you’ll see that $COMPQ has broken above its 50% retracement level but is battling with resistance from its 100-day SMA (see chart 2).

CHART 2: NASDAQ COMPOSITE ($COMPQ) FIGHTING RESISTANCE. After breaking out from its 50% Fibonacci retracement level, $COMPQ is now trying hard to get past its 100-day SMA, which sits a hair above the Fib level. Chart source: StockChartsACP from StockCharts.com. For illustrative purposes only. Another interesting point to note is that the 100-day SMA aligns with the November 15, 2022 high. So, busting through the 100-day SMA could take some effort. If it does, we could see investors gravitate towards a risk-on investing strategy, a sign that investors are becoming more complacent.

Speaking of complacency, another indicator to keep on your radar is the $VIX. On Wednesday it fell sharply to the 20 levels. The $VIX is a fear gauge that’s closely watched by traders. Post-pandemic, $VIX has ranged between 20 and 35, which is higher than what was considered its norm (between 12 and 20). So, if $VIX starts to move lower than 20 and goes back to its pre-pandemic regime, it would further confirm that investors are less worried about the market.

We’re not necessarily out of the woods yet but keep an eye on key resistance levels. If $COMPQ breaks through its 100-day SMA and the other broader equity indexes also break through their resistance levels, it could be a positive sign. Remember, we are in the last trading month of the year, which typically, is a strong month that culminates with the Santa Claus rally. According to the Stock Trader’s Almanac, the Santa Claus rally tends to come to Wall Street nearly every year. Let’s hope we get one this year.

Jayanthi Gopalakrishnan

Director, Site Content

StockCharts.com

 

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

0
FacebookTwitterGoogle +Pinterest
previous post
EXCLUSIVE: Democrat’s Criminal Ballot Activity Includes More than Their “Ballot Harvesting”
next post
State of Florida Removes $2 Billion from BlackRock In Anti-ESG Divestment-“Using Our Cash to Fund BlackRock’s Social-Engineering Project Isn’t Something Florida Ever Signed Up For”

You may also like

DP Trading Room: How Bad Data From Major...

December 4, 2023

Grayson’s Top 5 Most Valuable New Features &...

December 10, 2022

Will QQQ Retest All-Time Highs By End of...

March 21, 2025

MACD Tactics to Improve Timing

November 3, 2022

Hot Gold Drops & Shaky Semis Pop

May 8, 2023

Mish’s Daily: The Stock Market Bounces Amidst Strong...

September 12, 2022

Equities Struggle in Strong “NoGo” as Materials try...

April 22, 2024

Stock Market Sell Off: Is the Bull Market...

December 19, 2024

Tape Reading for Distribution

February 6, 2024

RRG Alert Tech Vaults to ‘Leading’—Is XLK Signaling...

June 20, 2025

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Friday Feature: Savannah Legacy Academy

      June 27, 2025
    • The Supreme Court Is Right on Reading Opt-Outs, But That’s Not Enough

      June 27, 2025
    • Barrett eviscerates Jackson, Sotomayor takes on a ‘complicit’ court in contentious final opinions

      June 27, 2025
    • Trump would strike Iran ‘without question’ if it restarts nuclear weapons program

      June 27, 2025
    • Florida man indicted for ’86’ posts allegedly threatening to kill Alina Habba

      June 27, 2025
    • Top House Republicans send stern warning to Senate GOP as Trump’s ‘big, beautiful bill’ risks delay

      June 27, 2025

    Categories

    • Business (8,329)
    • Investing (2,079)
    • Politics (15,835)
    • Stocks (3,174)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved