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Levels to watch: FTSE, Dax and Dow

A bounce in oil prices and the possibility of a more moderate line on debt from the Greek government has allowed markets to bounce back this morning.

A chart
Source: Bloomberd

Last night’s session in the US saw the market come storming back, revived by reports that Athens had changed tack in its approach to the debt question. It appears Syriza is now offering creditors a ‘menu’ of choices, rather than simply wiping out half of the debt pile. The Germans have not signaled any enthusiasm for this plan but indices still rebounded.

Oil prices are on the march for a third day, helping energy firms, especially in London, where BP has succeeded in managing expectations so that a 20% drop in profits and cuts to capital expenditure have led to a 4% rise in the share price. Combined with a rate cut in Australia, this news has allowed heavyweight mining and oil companies in London to rally again, pushing the FTSE 100 to a four-day high.

FTSE above 6800

Oil’s apparent resurrection and renewed risk appetite in mining stocks has lifted the index back above 6800 this morning. With the high from Friday under threat we look towards resistance around the January high of 6890.

Yesterday’s price action establishes 6720 as immediate support, followed by the 200-day moving average at 6675. Given how difficult it was for the FTSE to hold gains around 6900 I still remain cautious, but the bounce back for now looks healthy.

DAX bulls eye 11,000

This index has scored a fresh all-time high this morning, allowing it to boast of a 12% return for the year so far.

The hourly chart is still the one to watch here, having underpinned the gains since early January. If recent history is to be repeated then pullbacks in the direction of the 100-DMA should continue to be bought. Only a close below 10,700 negates the bullish outlook here, even if the index is once again overbought on the daily chart.

DAX bulls have set their sights on the 11,000 mark and it does not look like they will be deterred, regardless of events in Greece.

Dow targets 50-DMA

The Dow Jones has bounced over 2% from yesterday’s lows, moving back above the 100-DMA and giving an indication that a low may be in for now.

The test of the 200-DMA will have been the event that some will have been waiting for. The resulting bounce has allowed the relative strength index and other momentum indicators to show a turnaround, with the former heading back towards the 50 mid-point.

The first target on the upside is the 50-DMA and then the recent high at 17,800. Beyond that another run to all-time highs looks like a possibility. Bears must push this market back down to make another attempt to move below the 17,200 level, but barring a deterioration in the Greece situation the buyers are back in charge again.

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