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

Now that the Fed is out of the way, we look to see whether indices exhibit their usual late-September weakness, or whether the bulls can retain control.

Stock exchange
Source: Bloomberg

FTSE 100 with a definitive month ahead

Both bulls and bears are waiting to see whether FTSE 100 can take out the 7294 level. This key area of resistance, previously an area of support, will define the outlook for the index heading into October.

A push above this level targets 7320 and then on to 7450, the big resistance level of August. Meanwhile, a drop back below the lows of last Friday at 7194 would suggest a test of 7187 and then 7090. 

DAX moving into period of gains

A post-Federal Open Market Committee (FOMC) push higher has been knocked back this morning. The potential for bearish divergence on the four-hour chart between the price and stochastics indicates that we could be about to see a broader pullback for DAX.

Since the breakout earlier in September, retracements have been fleeting. Therefore, any drop back to 12,500 or lower should still be viewed as a chance to add to long positions, or initiate new ones, as the index heads towards fourth quarter (Q4). This period tends to see strong gains over the three months (average return: 6.8% over the past 15 years).

S&P 500 unable to break through 2510

As usual on Federal Reserve (Fed) days, a drop immediately following the statement was met by buying, with the S&P 500 moving back above the 2500 level.

However, it has so far been unable to move above 2510 this week, so this is the upside level to watch for now, as a break above here puts the index back in all-time high territory. As has been noted already this week, retracements in US markets have been fleeting, but with the Fed out of the way a broader drop back towards 2490 could be possible, or even to 2483. 

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