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

UK and US indices look particularly weak this morning, although the DAX is holding its ground after the European Central Bank meeting yesterday.

Data
Source: Bloomberg

FTSE 100

The drop back from 6400 continues, and with daily momentum indicators now in a more bearish position the stance has shifted from ‘buy the dips’ to ‘sell the rallies’. With the index back below the 6370 area it would take a close back above 6400 to restore the bullish outlook.

Intraday, the index looks quite stretched to the downside, so we may see limited drops today, but as the new week gets underway we would be looking for fresh chances to sell into any strength. Downside targets lie around 6210, and then down towards the 50-day simple moving average at 6145.

DAX

The picture here is less clear-cut, with the possibility that the index will manage one last bounce. For the moment, the daily relative strength index and stochastic indicators have yet to turn firmly lower, but if the DAX moves below 10,300 then the week ahead could see a further drop towards 10,121.

Below this we would expect a return to 9770. As with the FTSE, it makes sense to wait for a firm bounce before chasing this current downward move.

S&P 500

The sharp drop yesterday has put the sellers back in charge here, after a decent rally. If the index cannot get back above 2100 then the approach will be to sell into strength, with an initial target of 2035.

A close above 2110 is really the bullish catalyst needed to ignite a move to fresh highs for the year. 

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