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

Yesterday’s sell-off took indices back to key support, and for now the lows are holding. 

German stock exchange
Source: Bloomberg

FTSE 100 at its lowest since May

The losses seen yesterday took the FTSE to its lowest level since 9 May. The index bounced off the rising trendline off the December 2016 lows, so as long as we don’t see a close beneath 7296, the possibility of a bounce is still present.

Momentum is now firmly oversold for the first time since April, so the risk reward appears more skewed to the upside. However, the loss of support around 7380 is a negative development, and a bigger dip will see 7260 and then 7090 tested. A recovery back above 7400 would be a positive development.

FSTE chart

DAX testing key support zone

The DAX is now testing the 12,400 area, the previous big support zone back in April. If it can hold around here, then a bounce to 12,500 and higher is a possibility.

Further losses would encounter support at the 12,343 area, the 100-day simple moving average (SMA), and then down towards 12,000. 

DAX chart

S&P 500 still bullish

Independence Day next week means that US markets will likely be somewhat indecisive. However, the S&P 500 has already managed to hold the area around 2400, so unless we see a push below 2410 the bulls are still in charge.

After all, the index is still just over 30 points from its all-time high. It would not pay to become too bearish at this point, even if the index drops back to 2400. As long as it holds above 2420 there is still the possibility of a run back to 2450 and higher. 

S&P 500 chart

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