#INDICES ANALYSIS: #DAX30,#SP500,#SP500,#CAC40 (17 MAY 2022)
CAC Forecast: Index Continues to Find Buyers
I think this is more likely than not going to be a short-term rally that can get sold into.
The French DAX Index initially fell on Monday but found buyers underneath at the €6280 level. The market continues to find buyers, and it looks as if it is going to try to get to the 50-day EMA. The market is sitting just below the €6500 level and drifting lower. In fact, you could also make a bit of an argument for the 50-day EMA offering a downtrend line, that you could use as dynamic selling pressure.
Keep in mind that the CAC is essentially a luxury index, so it needs more risk appetite out there to push the market to the upside. The Parisian index has been sold off quite viciously, and at this point, a bit of a relief rally would make quite a bit of sense. However, that does not necessarily mean that we are going to be seen this market rally easily, and it certainly could set up a potential selling opportunity as well. The €6500 level would make sense as an area where there will be a bit of a built-in barrier, and any signs of exhaustion will almost certainly get jumped upon. On the other hand, if we break down below the bottom of the candlestick for the trading session on Monday, that would open up a fresh round of selling as well. At that point, I would anticipate that the market could drop down to the €6000 level.
Any breakdown below the €6000 level would open up a lot of selling pressure to send this market down to the €5800 level. In general, this is a marketplace that I think will continue to be noisy, so keep in mind that you need to keep your position size reasonable as the volatility is going to be all over the place, not only here but in just about anything else that is traded in the markets right now. As long as we continue to see a lot of concerns globally, this is a market that will be tenuous at best. I think this is more likely than not going to be a short-term rally that can get sold into. Ultimately, this market that looks likely to be a shorting opportunity given enough time, but one has to watch momentum as it is crucial.
S&P 500 Forecast: Index Stalls to Kick Off Week
There are a slew of earnings this week that could also come into the picture and cause a few headaches along the way.
The S&P 500 did very little on Monday as we have run out of momentum. That being said, the market looks as if it is trying to figure out what to do next, after that massive recovery on Friday. Because of this, I think the market will ultimately have to figure out what it wants to do based upon risk appetite, but it is worth noting that after that massive move higher on Friday, the markets did not do much. Because of this, I anticipate that we are going to continue to see a bit of negativity, due to the fact that we could not get any follow-through on the rally. Furthermore, not much has changed and I think that a lot of what we had seen on Friday was more or less going to be profit-taking.
If we break down below the bottom of the candlestick for the trading session on Monday, then it is likely that we will continue to see this market be noisy, as the economic outlook for the entire world, let alone the United States, is shady at best. There are lots of concerns about inflation, supply chain issues, and geopolitics. At this point, I think you will continue to fade rallies as they show signs of exhaustion and give you an opportunity to do so. The market breaking down below the bottom of the candlestick for the day would show a continuation of the overall trend, but you could also point out that we have tried to rally multiple times in a row, and that does suggest that at least there are some buyers out there trying to turn things around. I would not hold my breath at this point, but clearly there is a significant amount of effort at least being thrown at the market. It is also worth noting that we are hanging about the 4000 level, which is psychologically important, but whether or not it holds as structurally important is a different question. Above current trading we have the 4100 level offering structural resistance that extends to the 4150 level. That being said, it is not until we break above all of that that you can even begin to suggest that you should be a buyer of this market. There are a slew of earnings this week that could also come into the picture and cause a few headaches along the way.
DAX Forecast: Index Finds Buyers on Dips
At this point, it is probably only a matter of time before we have to make a bigger decision so I am more than willing to follow a large candlestick.
The German DAX index gapped slightly higher to kick off the Monday future session but then fell rather hard. That being said, the market has found enough support at the €13,871 level to turn things around and form a hammer. Now the question is whether or not the hammer is going to show some type of continuation to the upside or if it will be a scenario where we break down below the bottom of the candlestick to form a “hanging man”, which of course is a very negative turn of events.
I do think that it is only a matter of time before we have to make a bigger decision, but it is also worth noting that the 50-day EMA sits just above and is starting to break down. The 50-day EMA is an area where we would see a lot of dynamic resistance, so if we can break through there then it gives the DAX an opportunity to test the €14,250 level, an area that has been important a couple of times in the past. If we can break above there, then you can make an argument for a nice trendline break as well, allowing the DAX to go to the €14,750 level.
If we break down below the bottom of the candlestick for the trading session on Monday, then it opens up a potential selloff down to the €13,500 level. We have been in a down-trending channel for a while so it does sense that we would see a continuation of what has been going on as far as the trend is concerned. That being said it does look as if the market is trying to continue to press against the downtrend, but given enough time, I think we have got a situation where we have to make a bigger decision. Whether or not the ECB is willing to loosen monetary policy to bail out the markets would be a completely different question, but we also need to pay attention to the global economy as the DAX is highly levered to exports coming out of Germany. At this point, it is probably only a matter of time before we have to make a bigger decision so I am more than willing to follow a large candlestick.
0 comments:
Post a Comment