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

Indices are once again on the rise, with the DAX and S&P 500 on the verge of significant breakouts, while the FTSE 100 tussles with a new downward trend. 

DAX trader
Source: Bloomberg

FTSE 100 recovering

The recovery off 7400 continues, although those of bearish disposition will note that we are about to hit a downtrend line, which intersects with the rallies of last week, running down off the all-time high from the beginning of June. A failure to push above 7533 would be bearish, but we have seen this shallow descending trendline formation all too often this year, across a variety of indices. They have all ended with fresh breakouts to the upside, so bearish positions should be handled carefully. A drop from 7533 could suggest a return to the 7400 support zone, while above 7550 we are back on course to 7600.

A word on seasonality as the FTSE is now in the summer period when gains usually prove hard to sustain. The average performance over the past 20 years suggests a late-June rally tends to falter in early July, before a steady drift lower into September.

FTSE chart

DAX escaping the losses hitting other European indices

The DAX continues to hold its ground, having avoided the losses seen on the likes of the CAC40 and the EuroStoxx50. However, it now needs to break out from 12,900, the area of resistance that has stifled progress since 1 May.

A daily close above here will be the catalyst that bulls are looking for, while bears will want to see a failure that raises the prospect of a return to 12,560 and the 50-day simple moving average (SMA). An area of notable support since May has been 12,460-12,560. 

DAX chart

S&P 500 about to break out?

Here too we could be on the cusp of a breakout, if the S&P 500 can post a daily close above 2446.

Over the past few weeks, dips towards 2420 have been met by buying, while 2401 remains a potential area of further support. 

S&P 500 chart

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