#INDICES ANALYSIS: #DAX30,#SP500,#NASDAQ (14 JUNE 2022)

DAX Forecast: Threatens to Break Support Level

The German index has lowered to kick off trading on Monday and then fell straight down to the floor. That’s not a huge surprise, due to the fact that the inflation numbers in the United States were horrific on Friday, and it looks as if we are going to continue to see a lot of negativity around the world. If the Federal Reserve continues to need to tighten monetary policy, it does make a certain amount of sense that we will continue to see more of a “risk-off” type of attitude globally.

If the DAX is falling apart, you can bet your bottom dollar that a lot of the other smaller indices are doing the same thing and will continue to do so. Yes, we are a bit overextended to the downside, but at this point, it’s likely that we will continue to see this area underneath as a potential support level that could cause a bit of a bounce, but it also looks like it will get shot through. Ultimately, I think we break down below there and go looking to the 12,500 level. Rallies at this point should see plenty of resistance at the 50 Day EMA, as well as the 14,000 level.

Moves like this generally do have a bit of follow-through, but they also tend to have a bit of a bounce as markets cannot go in one direction forever. However, if we were to break down below the bottom of the candlestick for the day, I think that would only show an exacerbation of the nastiness in this market. The EU has a world of problems right now, and at this point, it’s likely that they will continue to see reasons to sell every time we rally. The European Union is very soft at the moment, and also has to worry about minor things like powering an economy!

It’s not until we start to see the US indices turnaround that we will more likely than not see the European Union recover. By European Union, I mean Germany. Germany is roughly 82% of the European Union, so this index will lead the rest of them around the continent, so even if you’re not trading this particular market, you should always keep an eye on it. At this point, it looks miserable.

S&P 500 Forecast: Continues to Mount Down

The S&P 500 has broken through the 3800 level, and it now looks as if we are in complete meltdown mode. Whether or not we can bounce from here is a completely different question, but at this point, it certainly looks as if any rally will be sold into. With the 10 year note yielding over 3.25% during the session, the S&P 500 had no chance. It looks as if we are ready to go much lower. At this point, the market looks likely to go to the 3700 level, perhaps even further than that.

Rallies at this point in time should offer plenty of opportunities to short this market, with most eyes watching the 4000 level due to the fact that it is a large, round, psychologically significant figure. Keep in mind that there are occasional bounces in bear markets like this, but I think those bounces are to be stepped on like a bug. The interest rate markets are screaming a recession is on its way, therefore it’s likely that we are going to continue to see panic in the market, and it looks as if we are finally seeing things break. Now that they are, where we end up is a bit of a guessing game.

If we do rally, it could be a brutal bear market rally, because we do get those from time to time. However, you are out of your mind if you think that something is going to change without the Federal Reserve stepping in. There will be the occasional “hopium” rally, but that is going to be short-lived. We have already seen that attempted a couple of times, but it’s probably worth noting that we are a little overextended at this point. I fade anything that looks like a rally that showed signs of exhaustion, but the way we have been falling apart, I don’t necessarily know that we are going to get it anytime soon. Regardless, I won’t be a buyer until we can break above 4200, which is going to take a Herculean effort to say the least, and perhaps the Federal Reserve coming out and suggesting that they are no longer tight with monetary policy. I would not hold my breath for that move, because inflation is so out of control in the United States.

NASDAQ 100 Forecast: New Wave of Selling

The NASDAQ 100 has fallen hard again on Monday, as we continue to see a lot of negativity in the marketplace. The 11,600 level is broken to the downside and opens up a new wave of selling, and it now looks as if 11,000 will be threatened in the short term. We could get the occasional rally, but that rally will more likely than not simply offer yet another selling opportunity as the markets are in chaos.

The fact that we are closing at the very bottom of the candlestick typically means that we will get follow-through, and therefore think it is probably only a matter of time before we not only test the 11,000 level, but break down below it to go much lower. Rallies are opportunities as far as I can see, with the first one being at the 11,600 level, followed by the 12,000 level. This is a market that is melting down as interest rates continue to climb, putting a lot of pressure on technology companies that need a growth environment to function.

Furthermore, we continue to see a lot of “risk-off behavior” around the world, and that is not going to do much for the NASDAQ 100 either. I would be a bit surprised to see this market break back above the 12,000 level, but it’s actually not until we break above the 12,800 level that I would be impressed, let alone convince to start buying. I just don’t see how that happens, so ultimately this is a situation where I think we are looking at a market that has only one direction in mind, and that’s much lower.

How far lower we go I have no idea, but I do recognize that there is nothing on the horizon that suggests things are about to change, and unless the Federal Reserve suddenly starts talking about loosening monetary policy, that’s not going to change. With inflation burning as hot as it has, and the fact that it was worse than most of Wall Street anticipated, it should not be a huge surprise to see that the sheep have started running. It's interesting to see that they have done this because quite frankly most of this was obvious beforehand. However, Wall Street has an entire generation of traders that have always been coddled by the Federal Reserve, and therefore misplaced optimism makes sense.

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