#INDICES ANALYSIS: #DAX30,#SP500,#CAC40 (15 JULY 2022)

 

DAX Forecast: Bounce From Major Support Trendline

Ultimately, I’m looking for a bounce that I can start shorting again.

The DAX has fallen significantly during the trading session on Thursday as we have seen stocks around the world struggle. The €12,400 level continues to offer support, as we have seen it do so a couple of times now. We have also bounced a bit during the trading session, as the absolute freaking out during the trading session gave up once we got close to the US afternoon, and perhaps we are ready to see a little bit of a relief rally. That being said, it is still very much countertrend, and it’s likely that this market will continue to break down.

If we were to break down below the €12,400 level, then it’s likely that we go down to the €12,000 level. We have been in a downtrend for a while, and even if we do get a nice rally from here, that rally is probably short-term, to say the least, because the German economy is essentially a basket case at this point, and it’s likely that we will continue to see a lot of selling pressure due to the fact that the rest of the world is slowing down, and the DAX is full of major exporters. Furthermore, the Germans are having trouble providing their own energy, and therefore it’s likely that we continue to see a lot of selling pressure over the longer term. At this point, the €13,000 level seems to be a major resistance barrier for short-term traders.

Even if we do break above the €13,000 level, it’s likely that we would see the 50 Day EMA offer a lot of dynamic resistance near the €13,400 level. The market continues to see plenty of reasons to fall, but we will get the occasional pullback like you would in any other trend. The DAX will do better than most of the other European indices on the whole because it is the first place that people will put money back into when they feel it is safe. A lot of this will come down to the European Central Bank and what they are going to do. At this point, they suggest that they are going to do a few minor rate hikes, but the question is whether or not they can do much of that? Ultimately, I’m looking for a bounce that I can start shorting again.

S&P 500 Forecast: Index Continues to Bounce Around

I look at rallies as selling opportunities but this might be a trait for next week.

The S&P 500 has gone back and forth during the trading session on the trading session for Thursday, as we continue to see the markets flow back and forth. Ultimately, the 3700 level underneath has offered significant support that we can show as a continue to go back and forth. Ultimately, the S&P 500 continues to see the market as one that is going to bounce back and forth and show a lot of noise. The 3900 level above is currently the top of the short-term trading range.

When you are looking at the chart, it’s difficult to forget the fact that the 50 Day EMA sits just above the 3900 level. The market has been noisy over the last couple weeks, as we are trying to determine whether or not the Federal Reserve is going to drive the US economy into a recession. Here’s a hint: it is. However, there are plenty of people out there that are willing to blindly ignore what’s going on, and that’s what we see in the charts. It’s worth noting that J.P. Morgan stated during its earnings call that they had “never seen an economic situation this bad.”

I do think that we probably have a little bit of a bounce in the short-term, but the bounce will more likely than not be sold into, especially at the first signs of exhaustion. With rates going higher, and inflation still ripping higher, it’s difficult to imagine that profits are going to be something that companies see. That being said, it’s not until we break above the 4200 level that the trend could change. Ultimately, I don’t see this being a likely situation, but if that were to happen, you cannot argue with price.

Ultimately, as we head into the weekend, I think a lot of people will probably choose not to put a lot of money into the market, and therefore it’s going to continue to stay in this range. However, we do have the Michigan Consumer Sentiment figures coming out, and that might be something worth watching as while Wall Street thinks the US economy is perfectly fine, those of us who live in the real world and west of the East River recognize that it’s a very different situation. I look at rallies as selling opportunities but this might be a trait for next week.

CAC Forecast: Index Sees a Lot of Volatility

Ultimately, this is a market that I think you are still looking at as an opportunity to short on exhaustion.

The French index plunged initially during the training session on Thursday to reach below the €5900 level but then turned around to show signs of life again. Ultimately, this is a market that I think continues to see a lot of noisy behavior, and it’s also obvious that the €6000 level continues to cause major issues. Alternatively, this is a market that looks as if it is trying to consolidate and find a bit of buying pressure, and if we can break above the 50 Day EMA, it’s likely that we could go higher.

The 50 Day EMA is sitting at the €6150 level, and could offer a bit of dynamic resistance. If we break above the €6200 level, then it’s possible that we could go much higher. If we do get that breakout, the 200 Day EMA would get targeted, which is sitting just above the €6400 level. After that, we have even more resistance at the €6600 level, which should offer resistance as well. Ultimately, once we break above that then you could have a major breakout and potentially even a major trend change.

Alternately, if we were to break down below the €5800 level, then it opens up the possibility of a significant breakdown, perhaps opening up the possibility of a major meltdown. Keep in mind that stock markets around the world continue to suffer, mainly due to the fact that the global economy looks as if it is going to continue to struggle. Furthermore, the market is likely to see that the inflationary issues will continue to be the biggest problem, and of course, France is going to suffer right along with the rest of these indices.

Looking at the start, it seems like we are going to see a lot of noisy back-and-forth type of action, and therefore it’s likely that the market continues to see a lot of huge moves, but perhaps based on short-term charts more than anything else. You should be cautious with your position size in this type of environment because even if we do continue to see a massive downtrend, the reality is that you will get the occasional bear market bounce that will rip the face off of the bears. Ultimately, this is a market that I think you are still looking at as an opportunity to short on exhaustion.

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