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

Indices took a tumble yesterday, but are holding key support for the time being. 

US trader
Source: Bloomberg

FTSE 100 – more weakness ahead?

The FTSE is now testing the bottom end of the support zone that has prevented further downside since mid-May. A close below 7370 on the four-hour chart would be a signal that more weakness is ahead, potentially taking us to 7260 and then 7090.

Any bounce needs to clear the sequence of lower highs that has prevailed since the beginning of June. This would need a move above 7490. 

DAX long-term bullish direction

A close below the 50-day simple moving average (SMA) at 12,647 is an ostensibly bearish development, but the last time this happened, back in April, the stay below the indicator lasted barely a day. The DAX has a 100-point zone of support from 12,480 – 12,580 that has held since May, so if this continues then we could see a bounce materialise.

Only a close below 12,480 would be particularly worrying. Dips have been bought all year in this market, and there seems little reason aside from euro strength to be particularly worried about the long-term bullish direction.

S&P 500 support at the 200-day SMA

Yesterday felt like a major day, but it is mainly a reflection of how quiet markets have been. The S&P 500 has fallen to the 2420 support area that has been holding since 9 June, and it has also found support at the 200-day SMA on the four-hour chart at 2418. If this holds then a bounce to 2450 and higher cannot be ruled out.

A drop below here would target 2400 and then 2370, if bearish momentum finally develops in a meaningful fashion. 

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