Levels to watch: FTSE, DAX and Dow

Downtrends are now firmly in place across the board, as equities continue to lose their appeal for investors. 

A candlestick chart
Source: Bloomberg

FTSE stochastics remain bearish

Having fallen further yesterday, the index now finds itself back below the descending trendline from late May. A fresh lower low yesterday confirms the downtrend set in place at the beginning of this week. With daily stochastics still firmly bearish, I expect intraday bounces here to be sold. We may see a move back towards 6660 during the course of this session, or indeed as far as the 50-hour SMA at 6672, but in due course I expect more downside, perhaps as far as the late June lows around 6500. 

DAX could fall to 10,830

A similar pattern emerges here, with possible support coming in at the 50-day SMA at 11,376, but a break below here leaves the index looking at a swift move towards 11,200 and possibly even 10,830, the 200-day SMA. As noted previously, the 11,600 is a vital first step in any turnaround, but with the euro still steadily rising the old correlation is back in place, with fresh lower lows on their way. 

Dow bears in control

A move below the 200-day SMA here (17,808) confirms that the bears are in control. A break below yesterday’s low at 17,700 would put further pressure on the Dow Jones and possibly see a move back towards the 17,500 level. As before, the index must reclaim 17,914 to be in with a chance of stabilising the situation and moving back above 18,000. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.