Markets were disappointed by a lack of action from Mario Draghi yesterday, as he came across as rather more hawkish than was initially expected, but it is worth noting that stocks in the US have risen 14 out of the last 15 times on non-farm payrolls day.
FTSE lacks momentum
The FTSE 100 is back below 6770 and, while we are seeing bids this morning at 6745/50, there is a bias to fall further given that there is short-term trend resistance from the 6886 highs seen in January. The failure yesterday to break 6800 properly underpins this.
Remaining below 6830 is also something of an issue for the UK benchmark, which has ultimately been underperforming relative to its peers. Nevertheless, one could expect that 6713 (50DMA) should provide adequate support.
Dow in tight range ahead of non-farms
Over in the US, the Dow Jones managed to break above 16,400 but is now having difficulty making headway through 16,456. Intraday support on the futures is coming from 16,416, with the 50-hour moving averages at 16,400 now providing support. A tight range is likely to continue until the market digests the ramifications of the non-farm payrolls number.
DAX suffers a slump
The DAX is back below the 50-day moving average again, and the 9500 metric has failed to hold. Bids are seen at 9430 presently, with the relative strength index on the one-hour chart showing itself to be rather oversold. Next stop is 9400 – the 50% retracement of the entire move from 9069 to 9734 – should we fail to maintain upside momentum from the intraday lows.
Getting through the 200-hour moving average at 9575/9600 will help the DAX on its way to retarget recent highs. Any fall through 9400 on a closing basis targets the 100-DMA at 9339.