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

Indices are weaker this morning, but this may lead to a buying opportunity as the rally extends into the second-half of May.

Data
Source: Bloomberg

FTSE 100

Yesterday can be chalked up as a victory for the bulls, having seen the price consolidate above the lows of Monday’s session, near 6100. However, today they need to push on beyond resistance at 6180, where gains have petered out for the past two days.

A breakout from here would then target 6280 and potentially as far as 6400. Momentum indicators such as stochastics remain bullish, but for the time being a real dip that would provide a definitively attractive entry has yet to appear. A close below 6100 would be needed to negate the bullish outlook for the FTSE.

DAX

DAX bulls need to get the index moving through 10,100 to be sure that there is more upside to this rally. However, the bounce off the 50-day simple moving averafe (9949) and bullish daily stochastics mean that the ‘path of least resistance’ (to quote Jesse Livermore) appears to be higher.

A close below 9940 would likely cancel out the bullish thesis. A move above 10,100 would then clear the way to the 200-day SMA at 10,182, and then on to 10,400, where the April rally petered out.

S&P 500

US indices did particularly well last night, and the pullback so far this morning is more an example of profit-taking than anything more serious. Indeed, if it leads to a noticeable dip into oversold territory on the intraday chart (e.g. the one- or two-hour) then it would be welcomed as a potential buying opportunity, perhaps around 2065 for this index.

A move through 2085 would indicate that the bulls are still in charge, with the next area to watch being 2107 and the mid-April high. 

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