Technical Analysis - DAX 30 and S&P 500

The DAX 30 bounced higher as I mentioned in my last post. Now the index is back at the very critical level of 7320/7325.  A break above 7320 would send the DAX back up to 7400. A break below this week's lows would be very bearish.

Today's close in the S&P 500 is critical and the bulls should lift the index back to the highs around 1310 into the close. I am expecting a test of the 50 and 100 day moving average in the S&P 500 at 1317. The S&P 500 should hold 1294 otherwise another test of the 200 day moving average around 1264 is in the cards.

Market Analysis - DAX 30 and S&P 500

Today's action was obviously negative in the DAX. But as you can see the DAX 30 bounced off the drawn trendline several times and so it did today. For Monday I am expecting a move back down to 7083/7084 and from there a rise to 7200 or higher. If the German index falls below 7075/7065 and this scenario is invalidated. The next levels to the downside would be 7040, 7020, 6990 and below that the gap close and the 200 day moving average at 6960. But as I mentioned until a break below 7065 I am in favour of the upside scenario.

In the S&P 500 nothing has really changed since yesterday although today's session was very weak. During the session the bulls never fought back but the S&P 500 is still above its 200 day moving averages (both simply and exponential). I am still expecting a bounce to the upside for the coming days. I mentioned last week that maybe the bulls have to wait for July until the stock market is able to bounce. Above 1300 the next stop should be somewhere between 1320 and 1345. A break below the 200 day moving averages would probably send the index back down to the March lows around 1248 and below that support should be around 1225 to 1235.

Market Analysis - DAX 30 and S&P 500

After yesterday's action I got much more cautious and today proved me right. The DAX 30 closed down nearly 130 points at 7149. The DAX basically held the 7150 level and has the chance to rise to 7400 in the next few days. This scenario is still intact mainly due to a reversal in the after hours. The news out of Europe/Greece lifted the markets up from its lows.
Tomorrow and over the next few days the DAX must not violate today's lows at 7115 otherwise there is downside potential to 7040 and 6990. Resistance is around 7310 and above that 7400.

The S&P 500 looked very weak intraday but after half of the session stocks got some bids. The S&P 500 touched its trendline back from the March 2009 lows and its 200 day moving average and closed at the highs of the day. Overall today's action was very bullish in my opinion and I think the S&P 500 could easily move back up to at least 1320.

Market Analysis - DAX 30 and S&P 500

Yesterday the DAX 30 broke as expected above 7230 and reached its first resistance level around 7310. The DAX 30 tried several times to break above that level but always failed. I think tomorrow we could see some consolidation. A break above 7310 would give the DAX some room to 7400 to 7410. At least after that level we could see at least a retest of the breakout level around 7230. In the hourly chart the DAX is in an upward trend channel. Trendline resistance is at 7330 and trendline support is around 7160 (both rising). If the DAX 30 breaks below 7130 new lows would be very likely.

The S&P 500 is very likely forming a bigger topping formation. In the shorter time we could easily see prices back above 1300 more precisely I am expecting a move back up to 1325 to 1340. Most of today's trading session was in the favour of the bulls. The S&P 500 consolidated around 1295 but in the last two hours it gave back nearly half of yesterday's gains. That was not very impressive at all. A break below 1275 or 1270 and I think the S&P 500 will test the March lows at 1250. Usually the end of June shows weakness so I think the chances for a bigger bounce to the upside are much better in July.

Market Analysis - DAX 30 and EUROSTOXX 50

The DAX 30 is still in its sideways range between 7030 and 7250. A break above 7245 to 7250 would indicate a rise to 7410 to 7450. A break below 7030 and 6990 would send the index to 6940 the 200 day moving average. At this point I prefer the break to the upside but act quickly and be prepared for any scenario.

The EUROSTOXX 50 looks weaker than the DAX 30. A break below 2690 would be bearish and the next support zone would be around 2650. The index has to break above 2800 to get bullish. Then I think 2870 and above that 2950 is on the horizon.

Market Analysis - DAX 30 and EUROSTOXX 50

DAX and EUROSTOXX 50 have both closed quite ok. So I think the bulls will have a chance to push the indices higher. Just the last few minutes we saw an explosion in the Volatility Indices of the US-Indices which I was looking for. In my opinion we could see a nice rally over the next few days, maybe even weeks. Watch in the S&P 500 cash the 1249 level a daily close below it would be bearish. In the EUROSTOXX 50 today's lows should hold and in the DAX 30 the 6990 level is critical.

Market Analysis - DAX 30 and EUROSTOXX 50

The XETRA DAX 30 is lower today but still forming a bottoming patter. In my opinion the 6990 level is very critical but it would be better if the DAX can hold 7030. Two reasons why I think there is not much downside left in all the western indices are the very bearish sentiment and the pretty extended put-call-ratios. My upside target is at least 7440. The situation would get more critical in the DAX if it would break 6990 but even then you would have to watch the daily closes because just around 6850 is the 50 week moving average which held several times as support.

The EUROSTOXX 50 broke to new lows today. The RSI on the other hand is not forming new lows. So this could be an exhaustion gap but you have to watch today's close. It should close above 2710.

Market Analysis - DAX 30 and EUROSTOXX 50

The German DAX 30 broke above its downtrend line of the consolidation pattern this morning. The recently mentioned gap between 7183 and 7194 is already closed and I think 7300 is on the horizon. Maybe even 7500 points are possible over the next few weeks. My opinion is that the up gap should hold today and even over the next few days. A break back underneath the trendline would be bearish.

The EUROSTOXX 50 also started some sort of relief rally this morning but not as impulsive as the DAX 30 did. It has already broken the lower trendline but I think there is also a second way how you can draw a trendline. In the chart below you can see that this trendline is now around 2800 so we will see. In the short-/medium term I am positive but take a close look at today's gaps in both indices.

Market Analysis - DAX 30, NIKKEI 225 and IBEX 35

Today I will take a quick look at the XETRA DAX 30, NIKKEI 225 and IBEX 35.

To me it seems that the German DAX 30 is still consolidating before moving back higher. My upside target is around the highs of February (7400). There it will be critical to take out the recent highs around 7600. That will be quite difficult because my opinion is that we are already near a top. But now back to the shorter term picture. There is still a gap open between 7184 and 7193 which I expect to get closed. Right there is also the declining trendline. For sure the DAX 30 could test before a gap close the 50 week moving average around 6850 but the declining line from the February highs to the March/April high held so far as support. If you are short the DAX 30 be aware that above 7200 a fast short-squeeze could occur up to 7300.

The NIKKEI 225 has build a more sideways than downward channel since mid 2009. I am not expecting a near term breakout of this channel. In the short term the recent lows around 9350 must hold as support otherwise a retest of the Fukushima lows is in the cards. On the other hand a break above 9750 will send the index to 10000 and afterwards the upper trendline will get in focus.

The Spanish IBEX 35 is an underperformer compared to the German DAX 30. The index is forming a triangle since 2010 and on a logarithmic scale the IBEX 35 already broke to the downside. Shorter term I want to emphasize the 9800 level. It was resistance many times in 2008 and 2009 and should act as support. Since mid 2010 the 11000 level acted as resistance. I will watch a break under or above these levels for a trading opportunity.

Please feel free to leave any comments or send me an email.

Market Analysis - CAC 40, S&P 500, SMI and ATX

Today I will take a look at the CAC 40, S&P 500, SMI and ATX.

The chart of the CAC 40 looks like the EUROSTOXX 50 chart. It is basically in a sideways market since the end of 2009. From last year's summer until now it formed a nice uptrend which lower trendline is at 3800. There is a good chance that this trendline holds as support once again otherwise a test of 3700 is very likely.
Below 3700 the situation would get more bearish and the lows of 2010 could be retested.

The S&P 500 on the other side looks in the longer term picture much healthier and is still above its uptrend. Nevertheless the shorter term trend is clearly down and test of the March 2011 lows, the 200 day moving average and the trendline, all around 1250 should happen next week. I am expecting a rebound back above 1300 in the next four weeks or so, but longer term this could turn out as a big top formation. If the S&P 500 breaks below 1250 the next support is around 1220 to 1225. In my opinion the mentioned scenario is in the cards until the S&P 500 breaks below 1200.

The SMI is like many other European indices in a sideways market since the end of 2009. A very critical level for the SMI is the 6000 level. It acted as support twice and a break below would indicate a move back down to 5200.

The ATX looks a little bit better than the SMI. In December 2010 the ATX broke above 2700 and 2800. This area acted as resistance in 2009 and 2010 and is now support for the index. But be cautious because the bounces off that 2700 level are getting weaker and weaker. A break below 2700 would send the ATX back down to 2400.

Market Analysis - DAX 30, EUROSTOXX 50 and FTSE 100

Market analysis for the upcoming week!

First let's take a look at the XETRA DAX on a weekly chart. Here you can see despite the recent decline the DAX is still in an uptrend. Both the 50 week EMA and the 50 week SMA are around 6800 and as I pointed out in the chart below these moving averages usually hold as support or resistance. Furthermore the trendline of the upward channel is just around 6800.

On a daily chart the situation looks similar. The 200 day moving averages are around 6900 and both the Stochastic and the RSI are showing some positive divergences. For next week I am expecting a last shakeout to the downside before moving back up to at least 7400. For now I think an ending diagonal is in the cards which maybe pushes the DAX up to 7800. The last move up should overshoot to the upside above the upper trendline. If we are testing 6800 to 6900 during the first two days next week I am still expecting a weekly close above 7040. If we are closing next week below 6800 I am rethinking my bullish scenario.

The next chart shows the EUROSTOXX 50 which broke out of its channel to the downside. As I mentioned in one of my last few posts I think the EUROSTOXX is testing the 2300 area during the next few months but for now the index is still in a big sideways correction. In the short term the EUROSTOXX 50 is oversold and should retest 2800. A break below 2700 on a closing basis would indicate a move back down to 2600.

The FTSE 100 is still above its trendline and fighting with its 200 day moving averages. If the FTSE cannot hold this trendline a move back down to 5600 is very realistic. A break above 6100 would give us an upside target around 6400 and a break below 5520 will probably send the FTSE 100 back down to 5000. I am not expecting a breakout of this range between now and the end of August but be aware of these levels.