Daily signal chart of SPY

Hourly signal chart of NQ:

Executive Summary

Recent price action in the NASDAQ 100 and SPY indicates potential short-term recovery following a prolonged corrective phase. While technical indicators suggest an early-stage bullish reversal, overhead resistance levels and macroeconomic uncertainties warrant a cautious approach. We maintain a neutral-to-cautiously bullish stance over the next 5–7 trading sessions, contingent on the ability of indices to sustain momentum above key technical levels.

Market Overview & Technical Analysis

NASDAQ 100 – Hourly Chart Analysis

Trend Structure: The NASDAQ 100 has been in a prolonged downtrend but recently triggered a buy signal as price rebounded off support near 19,400.
Moving Averages: Short-term moving averages (e.g., 20-hour and 50-hour) are beginning to slope upward, suggesting a possible shift in momentum. However, the longer-term 200-hour MA remains downward-sloping, reinforcing overhead resistance.
Momentum Indicators:
MACD is showing early signs of a bullish crossover but remains in negative territory.
Stochastic RSI is rising from oversold levels, indicating a potential short-term bounce.
Key Resistance Levels: 20,450, followed by 20,800.
Key Support Levels: 19,742 (recent pivot low) and 19,400 (critical downside level).

SPY – Daily Chart Analysis

Trend Structure: SPY remains in a short-term correction, but a recent buy signal suggests a potential stabilization phase.
Moving Averages: The price remains below key MAs, suggesting the broader trend is not yet bullish.
Momentum Indicators:
MACD is showing divergence, implying that downside momentum is fading.
RSI remains neutral, lacking a strong directional bias.
Key Resistance Levels: 520, followed by 528.
Key Support Levels: 505 and 498.

Market Outlook & Trade Implications

Base Case Scenario (60% Probability): A short-term rally continues, with NASDAQ 100 testing 20,450–20,800 and SPY targeting 520. This assumes momentum sustains and buyers step in at key support levels.
Bearish Scenario (30% Probability): Failure to hold recent gains results in a retest of support levels, leading to renewed selling pressure below 19,742 (NASDAQ 100) and 505 (SPY).
Bullish Scenario (10% Probability): A rapid breakout above 20,800 (NASDAQ 100) and 528 (SPY), signaling a stronger-than-expected market recovery.

Investment Strategy:

Short-term traders: Consider long positions if NASDAQ 100 holds above 19,742 and SPY above 505, with a stop-loss below support.
Medium-term investors: Maintain a neutral stance, awaiting confirmation of a sustained uptrend.

Conclusion

While technical indicators suggest a potential short-term rebound, broader market conditions remain uncertain. A sustained move above resistance levels is necessary to confirm a shift in trend. Investors should closely monitor macro data releases, interest rate developments, and corporate earnings guidance for further confirmation of market direction.