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FTSE 100, DAX and S&P 500 all move rapidly lower

Indices took a swift turn lower yesterday, wiping out recent gains. Is this the beginning of a new leg down?

FTSE 100 hits three-week low

Yesterday saw a swift downward move for the FTSE 100 that wiped out the gains made since 22 May. The price broke below rising trendline support from the March low, but managed to hold above the 50-day simple moving average (SMA) at 5950, for the time being.

The index has managed to edge higher overnight, with today’s price action likely to be crucial; if the it can hold 5900 and recover 6100 then a more bullish view will start to emerge once again. Alternatively, further declines below 5900 open the way to 5730 and 5500.

DAX goes into reverse

The DAX has lost around 1000 points from the high at the beginning of the week. Given it had rallied some 3000 since mid-May, such a pullback is not unexpected.

Losses have stalled overnight, with the index holding 11,700 and 11,800. If the overnight move higher reverses early today, then we look for a move below 11,700 that brings the 100-day SMA at 11,384 into view, followed by 11,265 and then the rising 50-day moving average at 11,069. Alternatively, a more bullish view might emerge if the index can hold above 11,700 and then push on to clear 12,146, the 200-day SMA.

S&P 500 dives sharply

After edging lower earlier in the week, the S&P 500 dropped like a stone yesterday, although it has managed to hold the 200-day SMA (3019) and is only back to levels last seen at the end of May.

Much depends on how today develops – a small overnight bounce has lifted the price off the 200-day SMA. If this holds and a cautious move higher begins, then 3130 and 3230 come into view. On the other hand, a push below 3000 puts the price below yesterday’s low, and could open the way to 2960, which was previously an area of resistance in late April and during the first half of May.

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