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

Indices are under heavy pressure this morning, with the FTSE and S&P 500 looking particularly bearish.

New York Stock Exchange
Source: Bloomberg

FTSE 100 unwinding

A sharp drop on the open has seen the FTSE touch its 50-day simple moving average (SMA) at 7275 for the first time since late February. The 7260 area provided crucial support back in the first half of March, preventing serious downside, so this is the initial area bears need to break.

Below this we have 7192 and then 7130 as levels to watch for a possible bounce. The first key area of resistance would be 7320, followed by 7359 and then 7400. A break and then retest of 7260 would potentially indicate a bigger unwind is at hand here. 

FTSE chart

DAX in consolidation

For now the price action on the DAX seems more indicative of further consolidation rather than an immediate move lower.

However, a break of 11,927 would mark the first real sign of further downside. Below this, potential areas of support may arise around 11,720 and then 11,426. At present, bears will have to bide their time, while for buyers there may still be an opportunity for a push back to 12,080 if 11,927 holds.

DAX chart

S&P 500 to recover?

S&P 500 touched its lowest level since mid-February in early trading, but crucially it is below 2340 and also the 50-day SMA (2332). The next area of potential major support would be 2265, which would see all the gains since the end of January wiped out. A recovery from here, ideally reclaiming 2360, would signify a new higher low has been created, leaving the door open for a return to 2400 and the all-time highs.

Indeed, with options suggesting an increase in bearishness and the strength of the current rally still fresh in our minds, there is scope for a recovery of lost ground in the short-term, helped by the combined effects of end of month and end of quarter positioning, and inflows for the new month and quarter.

S&P 500 chart

S&P 500 chart

S&P 500 chart

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