NASDAQ, ASX 200 INDEX, GOLD PRICE OUTLOOK:
- The Nasdaq Composite extended its record-scrapping journey, but RSI signals overbought
- The ASX 200 Index fell on Wednesday, oscillating around a key resistance at 6,100
- Gold prices rebounded to US$ 1,930 as the US Dollar fell. Immediate support at US$ 1,910
Nasdaq 100 Index Outlook:
The Nasdaq 100 index shrugged off weaker-than-expected US consumer confidence data overnight and extended its record-scrapping rally. Similarly, the S&P 500 index also hit a fresh high. Despite these, the Dow Jones Industrial Average closed mildly lower. The US indices are looking overstretched from both a valuation and a technical point of view, rendering them vulnerable to a technical pullback should sentiment turn sour.
This might help to explain the cautious sentiment across the Asia-Pacific stock markets today, with Australia’s ASX 200 index and Singapore’s Straits Times Index trading lower. Hong Kong’s Hang Seng index failed to catch up with the US rally and struggled to hold gains. The Shanghai and Shenzhen Composite are both in red.
Sector-wise in the S&P 500, communication services (+0.97%), healthcare (+0.70%) and consumer discretionary (+0.53%) were doing the heavy lifting, whereas energy (-1.42%), utilities (-0.92%) and materials (-0.32%) were lagging.
S&P 500 Index Sector performance 25-8-2020
Source: Bloomberg, DailyFX
Technically, the Nasdaq 100 is riding an ascending trend (chart below), with its 20-, 50- and 100-Day Simple Moving Average (SMA) lines trending upward nicely. The RSI indicator has further stretched beyond the overbought level of 70, suggesting strong upward momentum but also calling for a potential technical correction. Immediate support levels in the Nasdaq could be found at around 11,300 -the 20-Day Simple Moving Average (SMA).
Nasdaq Index – Daily Chart
ASX 200 Index Outlook:
Australia’s ASX 200 stock benchmark opened sharply lower on Wednesday despite another record session in the Wall Street. Asia-Pacific investors are probably getting increasingly skeptical about the tech-driven rally and thus doubt its sustainability. Australia recorded 151 new Covid-19 cases over the past 24 hours, higher than the previous session’s number of 121.
Technically, the ASX 200 index has retraced back to the ‘Ascending Triangle’ as shown in the chart below. It is now facing an immediate resistance level at 6,100 – the upper bound of the triangle. ‘Range-bound’ might be the status quo for now.
ASX 200 Index – Daily Chart
Gold Price Outlook:
A soft US Dollar is sending gold prices higher on Wednesday. Asia-Pacific equity markets failed to follow the US indices higher, signaling a ‘risk off’ sentiment that propelled precious metal prices. The mid- to long-term prospect for gold remains bullish, underpinned byUS presidential election uncertainties, US-China trade frictions and ultra-loose monetary conditions.
Technically, gold prices have likely formed a ‘lower high’ as it failed to break through the all-time high seen in early August. Its near-term momentum is likely to remain weak, making room for more consolidation below the US$ 2,000 mark. Gold prices have found strong support at around US$ 1,910 – the 61.8% Fibonacci retracement. An immediate resistance level could be found at around US$ 1,940 – the 50% Fibonacci retracement.
Gold Price – Daily Chart
Recommended by Margaret Yang, CFA
Don’t give into despair, make a game plan
— Written by Margaret Yang, Strategist for DailyFX.com
To contact Margaret, use the Comments section below or @margaretyjy on Twitter