Levels to watch: FTSE, DAX and S&P 500

Europe has failed to follow the good lead from the US yesterday and is moving further into the red, as the next leg down in the current pullback gathers momentum.

Traders on the New York stock exchange
Source: Bloomberg

FTSE 100 may experience more weakness
The index may well look to play catch-up after a good US session yesterday, but overall it remains stuck in a downward move. A failure to get back above 6300 in the coming days would indicate more weakness lies ahead, potentially down towards the 200-day simple moving average at 6193, or just above this to 6200, where gains stalled throughout March.

A close above 6300 puts us on course for the April peak around 6430. However, for the time being, selling into strength seems to be the correct approach.

DAX looks like it may turn
We may see the index begin a fresh leg lower today, having moved gently higher overnight. So long as the price holds below 10,200 then the outlook remains bearish, with a move back towards 9880 in the first instance.

It would take a close above 10,300 to reverse the negative trend, so as with the FTSE bounces are more likely to be sold rather than dips bought. 

S&P 500 turning lower once more
A strong start to May yesterday gave the bulls some breathing space, but it was really a bounce from oversold levels, combined with the oft-seen rally on the first day of the month.

With the index now turning lower, it looks like more weakness could be on the way, with a move down towards 2045 or even 2035 in the first instance. It would need a close above 2093 to confirm a bounce is in progress. 

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