Dax, S&P, Nasdaq and Dow

The German DAX

The German Dax index is currently trading right above what is the midpoint of the years range at 1.0850. The high was reached at 12374, the low extended to 9325 in September. The current price is at 10886. Looking at the daily chart below the pair is currently consolidating between the major MAs I use on equity charts - the 50, 100 and 200 day MAs. The 100 and 50 day MA are both converged at the 10586/91 respectively (close enough). The 38.2% of the last move up from the low comes in at 10626. The combination held support on the dip on Friday. Today the price is higher. ON the topside, the 200 day MA at the 11080 creates a technical ceiling.

Overall:

  • In the middle of the range
  • Above the converged 50 and 100 day MA, but
  • Below the 200 day MA

create a technical picture of a market that does not know what it wants to do. As a result, look for traders to lean against the MAs until there is a break and run (hopefully with a reason). If there is a slight bias it would be on the bullish side with the price rebounding from the low quite nicely, and moving back above the 50 and 100 day MA. Moreover, those two MA have held support. But the advantage comes with an asterisk. That is the price needs to get - and stay above the 200 day MA and ultimately get above (and stay above too) the topside trend line around the 11500 level.

S&P 500

The S&P index has been flirting with the 200 day MA over the last few days of trading. ON Thursday, the price closed below the MA at the 2064.58 currently. ON Friday, the tumble lower was reversed and surpassed. Today, the price is back down sniffing the key MA level again. The low today reached 2066.78.

Technically, the fall on Thursday did hold the 50 day MA (currently at 2044.82). The pair is also above the 100 day MA at 2033.77 currently.

Being above all three MAs on the daily chart is more bullish but the index is not racing higher. There is additional resistance above at the topside trend line at 2111 currently and then the succession of highs for the year.

Buy against the 200 day MA with a stop below it? That is what seems to be happening in trading over the near term. IF the 100 and 500 day MAs give way below, the US stock market could be in trouble again.

The Nasdaq

Like the S&P, the Nasdaq index is above the 50, 100 and 200 day MAs. IN fact all three MAs are near each other (between 4944 and 4975). As long as the index remains above this cluster of support the bias remains bullish. The last correction in November barely mad it below the 200 and 100 day MAs. Prior lows from May and July also held the decline. This is more bullish overall, but is anyone really confident? There are a lot of risks in the market but at least the technicals should give a clear bias against the cluster of MAs.

Dow

The Dow's technical picture is also currently bullish with an asterisk. The price is above the 50, 100 and 200 day MAs. It has held support on the recent falls below the 200 day MA (against the 100 and then 50 day MA). The bearish, is the sellers against the topside trend line. IF there is a move above that trend line and the price stay above it, the technical picture will improve. Until then the market remains on a high fence but traders can still fall off and head back lower.

Overall, there is reason to cheer the technicals on the major stock indices but none are running away to the upside. Risk can be defined and limited against the major MA levels. ON the topsides, if there is not a MA, there are trend lines or old highs that make for resistance. It makes sense to - fundamentally - to have the dynamic. Central banks continue to keep their balance sheets elevated and growing in the case of the ECB. That is supportive. However, the Fed will tighten. Places like China remain fragile and geopolitically, the situation is not a happy time. So it is not unrealistic to think the waters will remain choppy.