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Levels to watch: FTSE, Dax and Dow

The Fed meeting last night produced little excitement, but indices are continuing to push higher in the absence of any clear indications that September will bring a rate hike.

DAX sign
Source: Bloomberg

FTSE eyes 6764

Three days of gains have almost entirely reversed the bearish outlook we saw at the beginning of the week. The index has closed above the downtrend line off the May highs and pushed on. The target now becomes the 200-day SMA at 6764 and then on to the July highs at 6800.

Daily stochastics are yet to turn bullish, but should do so if the index can sustain gains today above 6650. We would need to see a turnaround and close back below 6580 and the previously mentioned downtrend line to reverse and put the index back in a bearish formation.

FTSE 100 chart

DAX test yet to begin

Eurozone indices are still labouring under the heavy burden of bearish stochastics, but having pushed higher for three days they are beginning to look attractive from a long perspective.

The DAX has now moved back to the 50-day SMA at 11,325, with a close above here giving it the strength to push on to the 100-day SMA at 11,583, and then the July peak above 11,800.

The real test will of course be whether we can then push on from here and get back to 12,000, but for now it seems that cautious longs will be the order of the day. 

DAX chart

Dow above 100-hour SMA

Having marched higher for two days, US indices now look quite robust. With the Federal Reserve out of the way for now, it is not implausible to think we will see a fresh rally that will go back to the downtrend line off the index’s May highs, which would suggest a move back to 17,950 or thereabouts.

A bullish stochastic crossover means that I would look to buy on weakness, especially now that the price has pushed above the 50- and 100-hour SMAs (17,654 and 17,620 respectively). 

Dow Jones chart

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