FTSE 100, DAX 40 and S&P 500 take a breather as US markets reopen
Outlook on FTSE 100, DAX 40 and S&P 500 as earning’s season continues.
FTSE 100 stalls marginally below its 2018 record high
The FTSE 100 is within a whisker of its all-time record high but struggles to reach it as investors are pausing for breath as the World Bank, World Economic Forum and major US companies warn of a possible global recession this year while US banks increase their reserves amid the worsening outlook.
The FTSE 100 nonetheless still has its May 2018 all-time high at 7,903 in sight, ahead of the psychological 8,000 mark.
Slips may find support around last Thursday’s 7,816 high and also between the January and August 2018 highs at 7,796 to 7,791.
DAX 40 rally is taking a breather
The DAX 40’s strong early January rally last week overcame its long-term major resistance zone which consists of the 14,814 to 15,059 May 2021 to January 2022 lows but this week is losing upside momentum on gloomy economic forecasts by the likes of the World Bank and the World Economic Forum.
It is normal for an index such as the DAX 40 to consolidate in the short-term after such a steep advance as has been seen since the beginning of January and after nine consecutive days of positive closes and a rise of around 7.5%.
A retracement lower is looking increasingly likely with the 15,000 mark representing a short-term downside target. Much further down strong support can be seen between early and mid-December highs at 14,606 to 14,677.
S&P 500 levels out around the 4,000 mark as US earnings season continues
The S&P 500 is expected to slip back towards its 200-day simple moving average (SMA) at 3,960, having last week struggled around the psychological 4,000 mark and as worries about the global economy weigh on stocks after the US’s prolonged weekend.
Support below the 200-day SMA at 3,960 can be spotted at the 9 January high at 3,951. Further down a previous resistance zone now, because of inverse polarity, support area sits between 3,918 and 3,904. It is comprised of the late September and October highs and the mid-November and early December lows as well as the 55-day SMA. We expect this support zone to hold, were it to be revisited at all.
A rise and daily chart close above last week’s 4,004 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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