This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
There’s little macro data on the calendar today, other than the likely upward revision of US second quarter GDP, and this could swing stocks either way. On one hand, a better-than-expected growth figure for the US is certainly good news, yet given how addicted markets have become to additional liquidity and low interest rates it may actually put a further dent in investor confidence as monetary tightening becomes imminent.
FTSE continues to decline
The FTSE has continued to decline this morning, relinquishing the 6630 level briefly but finding a bounce from the rising trend line support originating from the June 2013 lows. Any further selling below the 6600 mark would see a return to the 8 August lows of 6528. The daily relative strength index is not oversold.
The 6617 level has held firm and represents the 76.4% retracement of the entire move from lose August lows. Mild divergence can be seen on the short term indicates that we could see a range bound trade with a retracement to 6650/60 level possible.
100-DMA supports DAX
The 100-daily moving average is for now working its magic in keeping the DAX afloat, with the 50% retracement at 9471 also lending a hand. Nevertheless, while below the 9520/30 level there remains risk of a further retreat. This morning lows of 9454 should be watched, as the bullish divergence on the H1 RSI could be the break down point for a move back to 9400. A move through 9530 could see the DAX pull back towards the 100-hour moving average at 9590.
Dow RSI indicates building momentum
The Dow Jones had a shocker of a day yesterday, and managed to find some respite around 16,930/40 and the 100-DMA. As long as this level holds today, we may see the index pare some losses – although judging by the futures market, there seems little appetite right now to get involved on the long side.
A breach of the 100-DMA would see the Dow move towards the 50-DMA at 16,875. The RSI indicates that momentum is building to the downside. Short-term resistance is now at 17,010 – above that lies the 17,100 target at the 100H MA.