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.

DAX market analysis

The German DAX is stuck in a range between 5750 (5700) and 6080 (6120). A close above that range would give us an upside target around 6400 and then 6600. A daily close below this range would end the DAX to 5500 and later down to 5000. So all in all we just have to wait for a break of this range...
Overall I am still very bearish on the stock market but until year-end I still think a rally could occur. 6600 would be a nice target, but not further than 7000. But do not get me wrong, if we close below 5700 I think a year-end rally would be quite difficult!

At this point intraday 5890 there is still no convincing upside reversal in place, so I think we have not seen the lows of the day.

Technical Analysis - DAX 30

The DAX 30 gapped up on positive news out of the US but gave up all its gains and is now down 2%. On positive thing I want to mention, the DAX nearly closed the old gap at 6960 and had a high volume sell off. So all in all I think a temporary bottom could be in place. The S&P 500 retested its 200 day moving average and bounced off it and the VIX never went positive during this sell-off. So the market felt some panic but stabilized.
Nevertheless the DAX should close above 7050 but at least above 7000 today. A close below would be bearish in my view.
After such a sell-off it is quite hard to define targets to the upside but there is still the gap at 7389 which could be closed before a steeper correction.
Quick add: in the very short term another test of today's lows could happen but they should hold as support.

Technical Analysis - DAX 30 and EUROSTOXX 50

As I mentioned last week I was expecting a pullback. We got a selloff. Nevertheless today the DAX 30 made a nice reversal on high volume like in March. I would have liked an intraday break of 6990 but you have a nice level to of support and a high volume reversal. So at least for the short term I think we could head higher. Very critical is 6990. A break below would hit many stops and the index could even gap intraday.

The EUROSTOXX 50 sold off hard during the last three sessions but found support at 2600. This level has to hold over the next few days. An upside target would be a gap close at 2800.
A very critical level in the S&P 500 Futures is 1294/1295. Watch these levels for defining the trend.

Technical Analysis - DAX 30 and S&P 500

The DAX ran into some resistance around 7440 to 7460. The 76.4% retracement of the forgoing downward move is there and the highs from February. Today's action could be the start of some consolidation. A break above today's highs on a closing basis would be very bullish. Support should be at 7310/7320 and below there 7230/7250.

The S&P 500 reached a very interesting level after that impressive rally. The uptrend from the March 2009 lows on a logarithmic scale is around 1340/1345 so maybe this was just a bearish retest of the broken trendline.

On a shorter timeframe the S&P 500 also reached the 76.4% retracement of the foregoing downtrend. Moreover there is a significant resistance area between 1340/1345 as you can see on the chart below. At this level the S&P 500 has been rejected four times since February. Ideally the S&P 500 will consolidate but does not break below 1294.

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 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 - 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.