Charting the markets: indices shine as 2024 dawns

(Partial Video Transcript)

New Year begins with a bang for European equities

Good morning and welcome to Charting the Markets on Tuesday 2 January 2024. Let me start by wishing you all a happy, healthy and prosperous New Year.

The New Year started off with a bang for equity indices in Europe after a mixed session in Asia. And we saw some retesting of previous resistance levels earlier this morning.

But since then, equity markets have come off slightly and heightened Middle East tensions because basically over the weekend, we had the US Navy helicopter basically shoot down three Houthi boats which tried to board a container ship and basically destroyed these. And we also had Iran sending a destroyer to the Red Sea.

So, all of those heightened tensions led to a rise in the oil price and also gold and silver prices. But we'll talk about those later.

FTSE 100 starting to slip

Let's begin by focusing on the FTSE 100, first of all. And we can see here that on the daily financial bet, we did retest basically the previous high seen in December, 7,769, but didn't quite manage to reach it before we started to come off.

And as you can see, we're slightly in red territory now and may actually slip further in the course of the day. From a technical perspective, the last reaction low that we saw was on last Thursday at 7,705. So that's a minor support level.

If we were to fall through there, and the cyclical 7,700 mark, which is just minor, just slightly below the October high of 7,702. So basically, if we were to slide through there, we may actually retest the November to January uptrend line, which currently can be seen around 7,678.

So basically, what I'm saying is short term, we tried the upside earlier this morning, started off on a positive footing, but have since come off these highs and are consolidating and may even slip over the next few hours with regards to the FTSE 100.

DAX 40 uptrend remains intact

And the story is quite similar in the German stock index, as you can see here, the DAX 40. Again, here, this is the daily financial bet.

And this had basically an upside surge, take the DAX 40 index to 16,960 earlier today, just marginally below its record high made in December, just above the 17,000 mark, before coming off again on basically a plethora of European final purchasing managers index (PMI) readings, and as heightened tensions in the Middle East worried investors.

From a technical perspective, basically, the uptrend is still intact. We have the sideways trading range we've been in for the last, basically, mid-December. And the last reaction low was made on 20 December 2023, 16,595.

Now, while we remain above the upside pressure may actually still take us to the psychological 17,000 mark, we may even make a new all-time record high. But if we were to give way and if we were to slip through 16,595, we would then have the 16,532 July high in focus.

And that could offer some pretty good support going forward. But short term, again, we were capped by overhead resistance earlier today and are starting to slightly look less positive than we did earlier this morning.

S&P 500 nearly hit its record high

Now, US markets are very interesting because here the S&P 500 nearly reached its previous all-time record high going back to January 2020. Let me just zoom out here onto the weekly chart.

You can see here that after nine consecutive weeks of gains, the S&P 500 nearly reached that January 2022 high at 4,817 on this daily financial bet, but didn't quite do so last week because it only rose to 4,795 before then coming off slightly on Friday on profit taking.

[…]