Weekend Market Analysis - DAX, EUROSTOXX 50 and S&P 500

This was certainly a very interesting week on the stock markets. As always I want to take a look at the XETRA DAX and the EUROSTOXX 50 and also at one US-Index.
First the DAX on a weekly candlestick chart. As you can see the candlestick of the past week has a very small body and also the weekly range was just 120 points. That means that the range was less than 2%. Also on the weekly chart you can identify a rising trendline which limited the upside since 2009. I personally do not expect a break of that trendline and so a acceleration of the uptrend. Moreover both the RSI and the Williams% are showing overbought conditions. Nonetheless I would never trade such indicators itself because just price action pays you.
Moreover the 76.4% retracement from the high in 2007 to the low in 2009 is at 7075 points which is obviously not very well charted.

The daily chart of the DAX shows a nice rising trend channel since September. The upper trendline is around 7175 and the lower trendline just below 6800. As you can see the last highs of this week did not touch the upper trendline which is a little bit worrisome. In the medium to longer term I am still expecting a move back to 6350. Can the DAX reach the 7200 level before that? Certainly! Nevertheless I think for the long-term uptrend a retest of the breakout level would be very healthy. Other signs are the recently mentioned sentiment surveys. Short-term trader should play attention to the inside candlestick formed on Friday. In addition to the bearish engulfing candlestick on Thursday a break in either direction will be followed by further buying/selling.

The EUROSTOXX 50 seems also a little bit extended to the upside and is still under the resistance level of 2850. Nothing really changed on Friday. The index is in my opinion neutral but extended.

Now let's take a look at the 5-year weekly chart of the S&P 500. The downtrend since 2007 clearly broke in 2010. The index run into resistance around 1220 and retested the trendline. Since September the S&P had a nice bounce back up to resistance. This week the index broke through on a daily and a weekly basis. Nevertheless there is further resistance around 1250 and later around 1300.
In late 2009 and beginning of 2010 the RSI showed some divergences on the weekly chart which looks similar what the RSI on the daily chart of the DAX is forming nowadays. As you can see at the S&P divergences are just a warning sign and not a trading signal.

After another 5 to 10 points to the upside we could see some profit taking. Moreover when the S&P 500 reaches 1250 I think the DJIA will reach the former highs from November around 11450 again. So maybe a little bit of a correction could occur nonetheless the S&P 500 broke to new highs. Further the DJIA was forming a candlestick of indecision on the weekly chart.

Watch out what China does over the weekend because this will definitely have strong influence on the stock markets around the world.