​​​​FTSE 100, DAX 40 and S&P 500 drop on recession fears

​​​FTSE 100 consolidates further below its near six-month high ​

The FTSE 100 consolidates further below its near six-month high at 7,618 as UK house price growth slows sharply.

The Halifax House Prices index in the UK rose by 4.7% year-on-year (YoY) in November, the least since July 2020, compared to 8.2% in October. The average UK house price also declined by 2.3% versus October, the biggest drop since October 2008.

​Short-term a fall towards the 7,515 September peak and Tuesday’s low at 7,503 is on the cards, a slip through which should engage the late November low at 7,421. As long as it underpins on a daily chart closing basis, the October-to-December uptrend remains intact, though. ​

Good resistance can now be found between the 7,577 August peak and Monday’s high at 7,599. Key resistance remains to be seen among the 7,618 to 7,671 April-to-June as well as November highs.

​DAX 40 forms minor top

​The DAX 40 is seen giving back some of its recent strong October-to-November gains of over 23% despite China loosening its strict Covid-19 policy as market participants instead focus on US growth, with warnings from US banks about a recession next year leading to risk-off sentiment. ​

With the DAX 40 having slid through the October-to-December uptrend line at 14,520 earlier this week, the mid-November lows at 14,150 to 14,125 remain in focus but may offer short-term support.

​Immediate resistance above the 14,325 late November low comes in at the mid-November high at 14,442.

​S&P 500 slips towards key support area on US recession fears ​

The S&P 500’s slide through the 200-day simple moving average (SMA) at 4,032 on increasing US recession fears for next year and global risk-off sentiment has taken it back to its key short-term 3,918 to 3,904 support zone.

It contains the 21 September, late October and early November highs which may hold on Wednesday on a daily chart closing basis. ​Should this not be the case, the 55-day SMA and early October high at 3,826 to 3,807 would be in sight.

​Resistance can be seen along the breached October-to-December uptrend line at 3,975 and the minor psychological 4,000 mark.

​Since the Chicago Board Options Exchange (CBOE) Put/Call ratio has been trading for much of November at elevated levels of up to 1.46, above the March 2020 1.28 peak, the odds of a sharp decline into the end of the year being seen are relatively low as the ratio tends to act as a contrary indicator, meaning that when a large amount of puts are being bought compared to calls, equity markets generally tend not to fall much further.

​Instead, they have a high probability of rallying in the near future. Furthermore, since 1950 there have been three times as many positive as negative Decembers for the S&P 500.