Weekend Market Analysis - S&P 500

I just want to show a comparison between April 2010 and now. For this I uploaded two charts of the S&P 500.
You cannot deny the similarity of these two moves. I think that the S&P 500 formed on Friday a similar pattern like on April 27th 2010. But just take a look:

2010

2011

Just watch out! Now the chances for a deeper pullback are very high. Also if you are comparing the sentiment from April 2010 with the sentiment now you will see some kind of similarity.
I do not think that we are just selling off hard the next few days, but after a one to three day pullback I think we will see further selling in the US and European indices. In the S&P 500 I am looking for a pullback to 1225.

Market Analysis - DAX, EUROSTOXX 50 and SMI

Welcome back to the weekend market outlook.
The action of this week was not bullish at all. The DAX broke out to new 52-week-highs but reversed it the other day and in the weekly chart you can see the doji candlestick with higher volume. I would consider shorting the DAX if it breaks this weeks lows around 7000.

The EUROSTOXX 50 had a stronger week but it is now at the top of the bearish wedge and also a declining line from the two tops from 2010 is there. The analysis is still the same, as long as it does not break last year's highs around 3050 I remain bearish. Moreover the RSI is not forming new highs.

The SMI (Swiss Market Index) is still wedging higher and is neutral at best.
I would watch a break of 6400 very closely. A fast move down to 6000 is definetly possible.

Market Analysis - DAX and EUROSTOXX 50

The EUROSTOXX 50 retraced back to the recently mentioned level around 2770 and even a little bit further.
After that it surged back up to the top of the wedge. Around 2960 there is the next resistance back from 2009.
At this resistance the EUROSTOXX 50 will rest for a while. After that there is the chance to retest the highs from 2010 or to fall back down. Support is above 2850 or below that the rising trendline of the wedge. Usually such a rising wedge breaks to the downside, but if it breaks with momentum to the upside and takes out the highs of 2010 you should definitely be a buyer of the market. On the other side you have now a defined stop if you want to short the market and also a nice risk to reward ratio.

The XETRA DAX gapped up today. The next chart shows, that the DAX usually gaps at the beginning of a move or near the end of a move. There are three types of gaps: breakout gaps, continuation gaps and exhaustion gaps. The last uptrend since October started with a typical breakout gap, then in mid-November you can see another gap. This is a continuation gap which usually indicates that half of the trend is over. And last but not least today could have been an exhaustion gap.

The next chart of the XETRA DAX shows that the RSI and the Momentum indicator did not confirm the breakout. Furthermore the two year resistance trendline is just around 7200 (on the logarithmic chart). Until the gap gets closed the trend remains up but get cautious if the DAX falls back below 7040.

Market Analysis - Eurostoxx 50, DAX, S&P 500

After two weeks without a post I am back following the markets. There was not very much action during the last two weeks, low volume and a tight trading range.
What is the overall situation at the beginning of the New Year?
On the one hand there has been an incredible rally since September, on the other hand now the amount of bulls reaches extremes which we have not seen in years.
On the one hand the profits of the companies around the world are further increasing. On the other hand the crisis in the Eurozone does not seem solved. In my opinion it is also a matter of time until the financial markets are focusing on the solvency of the US. Maybe not in 2011, maybe not in 2012 but somewhere down the road also the US will have to consolidate their budget.
I think these fundamentals could result in higher volatility.

Recently I mentioned the 76% retracement around 7075 until now the DAX could not break through it. On the last trading day in 2010 the DAX retraced back to 6900. This level I mentioned too in one of the last few posts. I am expecting a break of the uptrend and a retest of the breakout level around 6350 to 6400.

The EUROSTOXX 50 retraced too and overall it does not look very strong. As I mentioned in one of my first posts the whole action since May 2010 seems to be a bearish wedge and many technical targets are pointing down to the area between 2250 and 2350. From a technical perspective this scenario is off the table if the EUROSTOXX 50 can take out the highs of 2010. For sure the European solvency issue has to intensify to pull the EUROSTOXX 50 down to 2250.

The S&P 500 nearly reached my personally upward target around 1285 to 1287. After that I am looking for a pullback at least back down to 1230 but longer time I still think that we could see the S&P 500 back down in the area around 1120.

Happy new year to everyone! I hope you like my analysis and as always feel free to leave any comments or send me an e-mail.