Dax futures last week made a new high but closed lower in a potential early warning that the market has run
out of momentum. The weekly stochastic is severely over bought and the daily stochastic is showing a bearish
divergence so we are watching for a break lower.
Below 7825 we should see 7790/85 tested and then last week’s low at 7762. Good support here and down to
the 21 day moving average 7752. A break lower and in particular a close below here therefore is confirmation
of building selling pressure and should target 7730 next.
A push through Friday’s high of 7856 however sees 7869, possibly last week’s high of 7888. This should be unbeatable but a break of 7900 could then target 7996/8005.
EuroStoxx held our lower support of 2697/96 and resistance at 2717/19 as expected. Last week we made a
new high and closed significantly lower plus we have closed below the 21 day moving average for the first time
since mid November. This is strong a bearish warning as we start this week.
We could see a sell off this week therefore so 2694/91 support needs to be watched carefully as a break lower
targets 2679/76. It looks unlikely that we will fall any further today but a break could see us trade down to
2662/61 with not much below here in the way of support until 2636, possibly 2628.
Resistance at 2708 then at 2717/19 could cap any bounce but above 2724 look for 2730/32 to try shorts with
a stop above 2743. If this level breaks we could see another test of 2755/56 highs which should hold the topside.
FTSE future held on above the 9 day moving average and broke the 6306/6315 highs but only reached 6323.
This is the fifth week of gains in a row, a very rare event. The weekly stochastic is severely overbought and the
daily stochastic is turning negative. Although this is not a sell signal we are watching closely for further signs
of loss of momentum.
A break above 6323 would take us back into mid 2008 territory with targets of 6359 and then 6396 which was
a high in May 2008. We start to hit some very heavy congestion here.
A drift lower today would find support at 6281 and a possible low for the day but a break lower could target
6255. This should hold a slide with the 9 day moving average and Friday’s low at 6244/41 offering further support just below. However a break and in particular a close below here would be negative for the rest of the
Dow Jones Industrial Average Future made an unexpected break above 13919 to reach 13962. Above here today we run in to the November 2007 high at 13994 and 11 month trend line resistance at 14008. This therefore is a big obstacle for the week but a break then targets 14097 and possibly 14205 above.
Below 13919 we have some support at 13886 then 13828 which could hold the low today. However watch for a
break of 13797 to target 13745.
S&P broke above 1506 for a run to the next target of 1510/11 and this was the exact high. A push through
1515 resistance could then target 1525/27.
We have support at 1506 but below here a test of 1500 is possible. Just below here we have good support at
1498/96 including the 9 day moving average which is unlikely to be broken today. If this level does fail a test
of last week’s low at 1491 could follow. This held on 3 days last week so it is another important level to watch
as a break target 1485.