SMI (Swiss Market Index CH0009980894) and Nestlé (CH0038863350)

The SMI compared to other indices had a very weak recovery from the 2009 lows and since early 2010 the SMI could not make new highs. It also crashed much harder in August 2011 and nearly reached the 2009 lows. On the monthly chart you can see two big reversal candlesticks but nevertheless the recovery is still very weak compared to the foregoing selloff. A very important level of support/resistance on the monthly chart is the area between 5900 and 6000. Back in 2004 this area acted as resistance and in 2010 and 2011 as support! I want to see a monthly close above 6000 to get bullish.

On the weekly chart you can see slow recovery since August 2011. The SMI just managed to close the gap around 5750. You can also see on the weekly chart the importance of 6000 level in the SMI.

On the daily chart of the SMI I kept an eye on the bearish wedge which has been broken to the downside recently. During the next few weeks chances are high for a further decline. At least a retest of the starting point of the wedge should happen. So my target to the downside is 4700 as long as we stay below 6000 on a weekly basis.

The chart of Nestlé (CH0038863350) is more neutral. After a huge selloff in August Nestlé could recover back into the range from the last two years between 50 and 55. In the middle of this range Nestlé often found support or resistance around 52. That is right there where it closed today. So above 52.40 is room to 54.50 to 55 and otherwise a retest of 50 Francs is very possible.