There’s little macro data on the calendar today, other than the likely upward revision of US second quarter GDP, and this could swing stocks either way. On one hand, a better-than-expected growth figure for the US is certainly good news, yet given how addicted markets have become to additional liquidity and low interest rates it may actually put a further dent in investor confidence as monetary tightening becomes imminent.
FTSE continues to decline
The FTSE has continued to decline this morning, relinquishing the 6630 level briefly but finding a bounce from the rising trend line support originating from the June 2013 lows. Any further selling below the 6600 mark would see a return to the 8 August lows of 6528. The daily relative strength index is not oversold.
The 6617 level has held firm and represents the 76.4% retracement of the entire move from lose August lows. Mild divergence can be seen on the short term indicates that we could see a range bound trade with a retracement to 6650/60 level possible.
100-DMA supports DAX
The 100-daily moving average is for now working its magic in keeping the DAX afloat, with the 50% retracement at 9471 also lending a hand. Nevertheless, while below the 9520/30 level there remains risk of a further retreat. This morning lows of 9454 should be watched, as the bullish divergence on the H1 RSI could be the break down point for a move back to 9400. A move through 9530 could see the DAX pull back towards the 100-hour moving average at 9590.
Dow RSI indicates building momentum
The Dow Jones had a shocker of a day yesterday, and managed to find some respite around 16,930/40 and the 100-DMA. As long as this level holds today, we may see the index pare some losses – although judging by the futures market, there seems little appetite right now to get involved on the long side.
A breach of the 100-DMA would see the Dow move towards the 50-DMA at 16,875. The RSI indicates that momentum is building to the downside. Short-term resistance is now at 17,010 – above that lies the 17,100 target at the 100H MA.