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FTSE 100, DAX and S&P 500 start the week well

Hopes of a rate cut by the Fed, plus the lessening of US-Mexico tensions have helped equities to make further gains this morning.

FTSE 100 back to late May highs

The FTSE 100 continues to rally, returning to the crucial 7370 area that marked the top in late May. A daily close above 7380 creates a new higher high, furthering the bullish impression created by the bounce from sub-7100.

Above 7380, the April peak at 7530 comes into view. A more bearish view requires a close below 7100 something that eluded the bears in May.

DAX crosses above trendline resistance

The DAX rallied hard to trendline resistance from the May peak last week, and so far this morning has opened above the trendline and also above the 50-day simple moving average (SMA) of 12,077. In addition, the daily moving average convergence/divergence (MACD) has turned positive for the first time since the end of April, reinforcing the bullish view.

Further gains target 12,320, the mid-May high, then on to 12,408 and then the May peak at 12,465. Last week saw buying around 11,930, so a move below here would restore a more bearish view.

S&P 500 continues its relentless rally

Last week saw the S&P 500 successfully clear the 2870 area, putting it back above the 50-day SMA (2871), and also move above the 2820 area that was a major stumbling block in the last three months of 2018.

The mid-May high at 2892 is the next target, while above there 2940 and then 2954 are upside targets to look for. Intraday pullbacks have been almost entirely absent for the past week, but even a drop back towards 2840 might still not signal the end of this current rally. A close below 2800 is needed to achieve that objective.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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