FTSE 100, DAX 40 and S&P 500 stall ahead of further major US earnings
Outlook on FTSE 100, DAX 40 and S&P 500 ahead of Tesla, Boeing and IBM earnings.
FTSE 100 opens higher on lower producer price inflation
The FTSE 100 opened higher than Tuesday’s low at 7,741 as UK producer prices increased by 14.7% year-on-year in December 2022, lower than the 16.2% reading in November and marking the lowest producer inflation since March of last year.
While Monday’s high at 7,811 caps, though, a short-term downtrend remains intact. For this to no longer be the case the current January peak at 7,876 would need to be overcome.
While 7,811 caps, there remains a risk of not only Tuesday’s low at 7,741 being reached but also last week’s low at 7,725. Failure at 7,725 would put the 10 January low at 7,668 back into the frame. As long as this level isn’t slipped through, the FTSE 100 remains in a medium-term uptrend with the May 2018 all-time high at 7,903 and the psychological 8,000 mark representing possible upside targets.
DAX 40 continues to range trade ahead of Germany’s IFO business climate
The DAX 40 swiftly dropped to 14,904 last week but this week range traded above this low whilst forming a minor high at 15,160 on Tuesday, ahead of Wednesday’s German IFO business climate data which is expected to come in at 90.2 in January versus 88.6 in the previous month.
While the index remains below 15,160, it may well slide back towards Tuesday’s 15,020 low, a slip through which would not only put last week’s low at 14,904 back on the map but perhaps also the May and October 2021 as well as the January 2022 lows at 14,839 to 14,814.
S&P 500 loses upside momentum following disappointing Microsoft earnings
The S&P 500 this week managed to rally to a six-week high at 4,040 but on Tuesday gave back some of its gains on disappointing earnings from Microsoft which showed earnings growth at its lowest level in more than five years and was accompanied by a cautious outlook.
A slip through Tuesday’s low at 3,989 on a daily chart closing basis could lead to a tumble towards the 200- and 55-day simple moving averages (SMAs) at 3,946 and 3,938.
Such a bearish scenario looks more likely than a rise above Monday’s 4,040 high since it has been accompanied by negative divergence on the daily RSI, pointing to a possible reversal lower soon taking shape ahead of earnings from Tesla, Boeing and IBM today.
Support below the 200- and 55-daySMAs at 3,946 to 3,938 can be spotted at the previous resistance zone now, because of inverse polarity, support area which sits between 3,918 and 3,904. It contains the late September and October highs and the mid-November and early December lows. Below it lies last week’s low at 3,886.
Only a rise and daily chart close above this week’s 4,040 high would push the mid- and 22 November highs at 4,042 to 4,043 to the fore ahead of the early January high at 4,101 and the December peak at 4,139.
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