Levels to watch: FTSE 100, DAX and S&P 500

A broader risk-on session yesterday has put the FTSE 100 and S&P 500 on a renewed upward trajectory, but the DAX is still finding the going difficult.

FTSE 100 aims to clear 7720 hurdle

The push higher gathered pace yesterday, with the FTSE 100 returning to the key 7720 area that has acted as a stumbling block to further progress since the middle of May.

A definitively bullish development would require a close above 7800, clearing the zone of resistance that has been so persistent. From here, 7900 comes into play. The overall upward move seen since mid-June is intact, and it would require a move below 7600 to suggest this is weakening, and then a close below 7540 to suggest that the sellers are back in control.

DAX diffident around 12,600

The DAX has not shown the same strength as other markets, with yesterday’s early move higher being knocked back late in the session.

Since last Thursday we have seen higher lows, so a move below 12,550 would negate this short-term bullish point. A drop below 12,500 and then 12,400 would likely suggest that a deeper retracement is in play. A move back above yesterday’s high of 12,750 would create a more bullish view, and suggest that a move to 12,900 and then 13,000 could be underway.

S&P 500 closing in on new record

The S&P 500 finds itself within 20 points of its January all-time high. A strong bounce from last week’s test of support around 2790 shows no sign of stopping just yet, with short-term bulls looking for a push above yesterday’s 2864 high as a sign that upward momentum has returned.

Above this, the January peak at 2877 comes into play. A near-term bearish view requires a close below 2790, but it is important to note that the index has been recording higher lows in the medium term since the January sell-off, and that the overall bullish picture remains firmly intact.

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