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

Stock markets have gapped higher as the prospect of a Donald Trump victory appears to recede. 

Source: Bloomberg

FTSE 100 could see 50-day SMA

The gap up and push higher sees the index recovering much of the ground lost at the end of last week, as the longer-term uptrend reasserts itself.

Crucially, the index is holding above the mid-September lows, while the first oversold reading on the daily relative strength index (RSI) since June has been met by fresh buying.

The next target area may well be 6895, the 50-day simple moving average (SMA). We may see some weakness ahead of the election, potentially filling in some of the gap higher, around 6700. 

DAX could head to 10,545

The bounce back to 10,400 keeps the DAX above the lows of early October. Continued gains would head towards 10,545 and then to 10,800 and the key resistance that has prevailed since August.

As long as the price holds above 10,200 we can expect more upside, while a drop through this level would head towards 10,080 and the 200-day SMA. 

S&P 500

Here too the index is back above its mid-September dip, and if it holds then we are looking at a return to the 2140 area.

The bounce off the 200-day SMA (2087) is linked to the expectation that Hillary Clinton will win the election, so if this changes we could see some rapid gap-filling.

A close above 2140 would then put the index on course to target 2150 and then 2178.

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