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

The FTSE holds above 7500, but there are signs of definite weakness emerging in US stocks.

Chris Beauchamp ChrisB_IG
Chief Market Analyst, London

Publication date : 2017-05-17T09:13:44+0100

City of London

Source: Bloomberg

FTSE 100 continues on a high note

So far there is no sign that the FTSE is particularly worried about the developments in Washington, with an overnight retracement towards the 50-hour simple moving average (SMA) at 7481, resulting in the same outcome as all previous instances since 8 May.

Dip buyers have entered, pushing the price back towards yesterday’s all-time high at 7534. The progression of higher highs and higher lows continues, and it would be unwise to get too bearish until the price drops back below 7450.

FTSE chart

FTSE chart

FTSE chart

DAX lacking progress

Despite popping up to 12,850, the DAX has made little progress over the past two weeks. The 12,659 level remains the area to watch, with a move below here on the hourly chart potentially signaling further weakness ahead.

Nonetheless, it needs a move below the 50-day SMA at 12,290 to put a dent in the rising trend. Even then, the 11,900 area is the one to watch for signs that the run has ended or is about to renew itself once more.

DAX chart

DAX chart

DAX chart

S&P 500 in a surprise fall

Yesterday’s sudden drop in the S&P 500 took it back towards 2380, the zone where buyers have entered since the beginning of the month.

It needs a close below 2370 to confirm that a bigger drop is on its way. Weakening participation, with fewer and fewer stocks pushing to new highs in recent weeks, tends to reinforce the impression that a correction could be at hand, but it is still early days.

S&P 500 chart

S&P 500 chart

S&P 500 chart

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