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

Indices have had a great week, so it is not surprising to see some of the fabled ‘profit taking’ as the weekend looms.

Source: Bloomberg

FTSE 100 showing some weakness

After hitting a peak around 6940 yesterday, representing an approximate 3% gain for the index since last Friday, it has not been surprising to see some weakness this morning.

So far, however it does not look like we will see this trend reverse. That would require at least a move below 6820. If the price holds above here then the next target will be a move back to 6940 and then on to 6960. Dips have been firmly bought this week and this remains our expectation for price action for the time being.

DAX moves slightly lower

The index is seeing modest losses, but nothing to put a real dent in the overall rally that has proceeded throughout the week. Indeed, some weakness should be welcomed as an opportunity for new buyers to enter, so as long as the price holds above 10,500 then an eventual push back to 10,700 should materialise.

Above here, the target will be the 10,800 zone where gains stalled in August and September.

S&P 500 showing losses

The price has tiptoed lower since it peaked around 2180 yesterday, but bulls should be unduly concerned until it goes below 2160, when there may be some cause for concern.

Any move below here would raise the prospect of a move back to 2136. A recovery and turn higher needs to clear 2180, which would then put the index on course for 2200.

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