FTSE 100 moves higher but DAX and S&P 500 more mixed

​FTSE 100 recovers 7600

The index’s gains ebbed away yesterday, starting off well but gradually diminishing as the day went on.

A lack of US markets meant that the index was lacking direction, and the impending UK long weekend for the Jubilee suggests that enthusiasm to drive the market higher will be in short supply.

But now that the European Union (EU) has agreed a broad ban on Russian oil imports, driving prices higher, the index’s oil heavyweights may help support further short-term upside.

The 6 May high at 7621 is the first obstacle to overcome, and beyond this the price targets 7657, the 21 April high, and then on to the 7690 peak from the beginning of April. This is also the peak from February, so a break above here provides a fresh bullish view.

A reversal below 7500 would see the price test the trendline resistance from the April high that it broke above last week, and then bring 7220 into view.

DAX hovers below 14,600

Over the past month, the index has enjoyed a healthy rally, creating higher highs, the last of which saw it return to the 14,600 high from mid-April.

Rebounding risk appetite in oversold markets was enough to generate a relief rally, although the caution around inflation and economic growth remains.

Traders will now watch to see if the price can push on towards the March high at 14,927, the next upside target. Crucially, the index has pulled away from trendline support from the May low, so it could potentially move back to 14,130 and surrender the gains of late last week, and yet still remain in an uptrend.

A drop below 14,000 would put it back below trendline support and argue for a fresh move to the downside that brings the May low at 13,274 into view.

S&P 500 pauses after rally

The long-expected relief bounce materialised here last week, taking the index back towards 4200 from its 3900 lows.

Unsurprisingly, progress stalled on Monday with cash markets closed, but futures have broadly held their ground overnight. The bounce from oversold levels was, in a sense, the ‘easy’ part. Now indices in the US have to decide whether they can push on towards more overbought territory, and claw back more lost ground.

At present, the index risks creating a lower high, something that remains the case unless it can clear the 4300 area that proved to be such a barrier in late April and early May.

After the losses of the first months of 2022, many will be watching for a reversal to reignite the downward move. A drop below 4100 could provide this, with the mid-May high at 4093 an area to watch too.

It must be noted that, after the sharp bounce last Thursday and Friday, some form of consolidation might be in order for US markets, which might lead to choppy price action, but little progress in either direction.