Equity gap to new highs

S&P 500, Nasdaq 100, Dow Talking Points:

Stocks have continued their post-FOMC disaster and the S&P 500 has already hit a new two-month high. The big driver for this morning is continued hope for de-escalation in Ukraine, with reports that Russia was withdrawing troops from Kiev. This helped US stocks punch a hole at the opening to continue a rather stunning reversal from the lows of two weeks ago. In the Nasdaq 100 – that slope was a whopping 17.41% – in two weeks.

The big level of note for today in the Nasdaq 100 is the psychological level at 15k. This spot offered some resistance in mid-February before the bears started chasing new 10-month lows the day before the FOMC rate hike. While the index has already stretched, there is one more point of resistance just ahead of it, plotted around the current two-month high and up to a Fibonaccia level at 15,307. This could be a place to plot for possible pullbacks, with 15k providing an element of support potential.

Nasdaq 100 Daily Price Chart

Nasdaq 100 price chart

Chart prepared by James StanleyNasdaq 100 on Tradingview

S&P 500

The S&P 500 is already trading at a new two-month high after a strong gap this morning. The key level here is 4600, which was support from early January, which then turned into resistance multiple times in early February just before the index broke to new lows. Yesterday’s price action broke out into this zone before the US closed, but the overnight movement has continued and this morning’s gap has helped the index test above this important spot on the chart.

At the moment, that zone runs from approximately 4590-4600 and could be repurposed for short-term support. If that can’t hold up or if we end up with a blowing move in the coming days, 4538 will remain interesting for support potential as it showed as resistance, but hasn’t shown much of support so far.

S&P 500 four hour price chart

SPX four hour price chart

Chart prepared by James StanleyS&P 500 on Tradingview

Dow Jones

The big level in the Dow is the psychological level of 35k. Last week there was a test of support in a key area of ​​the map around the 32,500 zone, triggering a strong bounce that eventually led to another monthly high.

The 35k level was last in play as an intra-day high on Feb 16e which led to a new low in 11 months. At the time of writing, it appears that the 35k level is already showing as short-term support for pullback themes after this morning’s gap. But there’s another fulcrum a little deeper, plotted from about 34,800.

Dow Jones Four Hour Price Chart

Dow Jones four hour price chart

Chart prepared by James StanleyDow Jones on Tradingview

— Written by James StanleySenior Strategist for DailyFX.com

Get in touch and follow James on Twitter: @JStanleyFX

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