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Banks are out of love again in Europe this morning, as the stress tests results linger, while poor results from Lloyds and Standard Chartered are conspiring to hold back the FTSE 100. Overall however the atmosphere is more conducive to risk assets, in part thanks to comments from ECB sources that indicated the bank was worried about the momentum of the eurozone’s economic recovery.
Banks stifle FTSE
If not for the banks, the FTSE would be around ten points higher in the morning session. The index did succeed in poking its head above 6400 once again but has been pushed lower once more, in contrast to the solid gains being seen in European indices.
The failure to hold gains above 6400 bolsters the theory that we will see additional downside here for the time being, with a first target being 6365 and then 6335. A close above 6400 would be a bullish development and would target 6420 and then 6460.
DAX looks to move higher
The DAX is still finding a hurdle in 9000, although the move above it this morning does look encouraging. A close through 9040 would certainly put the bulls back in charge and open the way to the 9110/9120 area.
Downside targets would be 8940, followed by 8880, but the continued rise in the daily RSI still underlines the point that this market is still looking to move higher, with other momentum indicators also pointing upwards.
50-DMA holds back Dow
The Dow Jones has run into the 50-DMA once again and for the time being this is holding back progress. However, the rally looks intact, with yesterday’s strong performance reminding us that it is the US that is still leading here. We may see some skittishness ahead of the FOMC meeting but a dovish update is expected and this would lay the groundwork for a strong end to the month.
A close above 16,900 would then point to 16,980, followed by 17,030. Above there the index would be on track to target its all-time highs. A drop lower today could still find buyers ahead of the FOMC, with possible support at 16,720 and 16,680.