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

Major indices are lower so far this morning, with even US futures showing some near-term weakness.

FTSE 100 firmly back on a downward trajectory

Monday’s revival is a distant memory for the FTSE 100, as the sellers took charge yesterday and drove the price further below the 7490 area of support and below the 200-day simple moving average (SMA) at 7495.

Further declines through Friday’s low of 7418 would then bring 7340 into play. Breadth is now quite weak, with around 25% of the index’s constituents above their 20-day moving average. This is getting close to bounce territory, but, as ever, the price remains the main driver. A close above 7500 would suggest a near-term bottom has arrived.

DAX back to 12,100 support

Tuesday’s sharp drop has brought the DAX back to the 12,100 area that held back in June and August. A close below here signals renewed weakness, with the 11,700 area the next big level to watch.

Near-term upside is contained by trendline resistance from the June highs, which comes into play around 12,500. The index is also seeing weak breadth, with just 20% of the index above the 20-day moving average.

S&P 500 edges lower

The S&P 500 is testing rising trendline support from the June lows, with a move below 2886 bringing 2877 into view as support. Below this, 2800 is the next big area to watch. Unlike the FTSE 100 and DAX, breadth is still elevated, as 60% of the index is above its 20-day SMA.

Usually, sustained dips in the price see this reading fall to the 40% mark or lower. In addition, pre-mid-terms jitters may hold the index back. Historically, in mid-terms years the index tends to top out in early September before bottoming out a month before the election (mid-terms take place on 6 November).

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa 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. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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