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

Thanksgiving week tends to be good for equities, and US stocks may well see gains, but the outlook for the FTSE and European indices looks less encouraging.

Traders in a German stock exchange
Source: Bloomberg

FTSE 100 defeated by 6800

Moves above 6800 have been defeated over the past week, so the current push towards this level may spark fresh selling. As noted last week, there has been a steady rising trend on the hourly chart from the 4 November lows, but like a bouncing ball each rally since then has got smaller and smaller.

If the price breaks below 6750 and then drops through 6700 we could see a swift move to 6612 or lower. Any rally must clear 6800, with targets on the upside lying at 6939 and then 6997.

FTSE 100 price chart

DAX looks downward

All attempts to break through 10,800 since mid-August have failed, and last week was no exception. The index has been steadily moving lower, although the 200-hour simple moving average (SMA) - 10,662 - has acted as support.

Friday saw the creation of a lower high at 10,750, so a downward move looks to be the most likely, especially if the dollar eases off and the euro gets a breathing space. In that case we look to a firm move below 10,600, which would then target 10,446 (the 100-day SMA) and then push on to 10,200, where the market bounced at the end of September and also in early November.

DAX price chart

S&P 500 edges up

The index is making very hard work of its move higher, proceeding by ever-smaller increments, and still unable to move firmly above the 2016 uptrend line. Still to be broken are 2195 and the all-time highs, and with momentum indicators looking decidedly toppy the upside could be limited here.

That said, Thanksgiving week is usually positive for equities, so bears may not get their sell-off quite yet. A move below 2170 is required to begin a bigger drop, perhaps down to 2140 and then 2100. 

S&P 500 price chart

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