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

Yesterday saw a sudden move lower, but already dip buyers are returning to put things back on their previous course.

Source: Bloomberg

FTSE 100 holds 7500

The breakout after the Bank of England (BoE) announcement last week has been followed by a dramatic pullback for the FTSE 100. However, buyers have come in to defend the 7500 area, with further gains coming in at the open.

As long as the index remains stuck below 7550, there is the possibility of further consolidation. A close above 7560 would mean that a run to the all-time high is back on. It seems prudent to remain bullish unless the index drops back below 7450.

DAX takes a dive

DAX bulls have been shaken out of their slumber, but already it looks as if the buyers are back in control.

The upside target is 13,533, while a push below 13,300 would suggest a dip to the bottom end of the current rising channel, perhaps as far as 13,200. 

S&P 500 recovers after brief dip

A drop to 2583 for S&P 500 created a new higher low on the four-hour chart, with a recovery underway. The level to watch for a breakout to new all-time highs is 2597. A drop below 2583 would target 2577, and then 2564.

With the percentage of stocks in the S&P 500 above their 50-day simple moving averages (SMAs) still declining, the index may struggle to make further gains in the short term, but sustained price action below 2540 would be needed to suggest a significantly bearish departure from the current outlook. 

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