Levels to watch: FTSE, DAX and Dow

Markets have enjoyed some of the best gains in a two-day period since 2011, or in some cases 2008. The turnaround has been as swift as the slump seen two weeks ago, reminding investors that the December period is not one where feet of clay are rewarded.

DAX sign
Source: Bloomberg

Today sees the event known as ‘quadruple witching’. This means that various derivates for stock index futures, stock index options, stock options and stock futures expire today. This usually results in greater market volatility and increased volume as futures and options investors close out their positions.

FTSE stalls at 50-DMA

For now the FTSE 100 has stalled at the 50-day moving average, but after a 6% rally off the lows such a pause is hardly unexpected. A close above the 50-DMA will open up the ground ahead of the 100-day at 6615, followed on by 6680 and then the recent peak at 6760.

On the downside a drop back to first possible support may be found around 6470 and then 6420.

DAX rally set to continue

The 9890 level has held back the DAX for now, but a close above here would target the 10,000 and then 10,100. It seems that the index is minded to continue its rally, but support on the downside could be found around 9750 and then 9640.

The hourly chart finds the DAX dropping out of overbought territory, but the rising trend from the 16 December lows should provide support, with 9810 stepping in first to provide a possible entry point for those slightly late to the party.

Dow eyes 18,000

The Dow Jones seems to have 18,000 in mind as a target, with any move beyond this taking us into fresh all-time high territory.

The 17,760 level could be immediate support if the index begins to weaken, followed on by 17,500 and then the 50-DMA at 17,350.

For this index the march higher really began on 17 December, and the rising trendline from this should also help support the price, with buyers possibly stepping in as the trendline is tested around 17,780. 

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.