Technical Forecast for US and Euro Stock Markets
Forecast for 1st February 2013
EuroStoxx starting to weaken as we broke 2724 and tested our lower support of 2697/96 where we expected prices to bottom out and we saw a low at 2694. This is good support again today but a break lower is possible for 2679/76. It looks unlikely that we will fall any further today but a break could see us trade down to 2661 with not much below here in the way of support until 2636, possibly 2628.
Resistance at 2708 then at 2717/19 could cap any bounce but above 2724 look for 2730/32 to try shorts with a stop above 2743. If this level breaks we could see another test of 2755/56 highs which should hold the topside.
Be aware that a close below 2691 tonight would have very bearish implications going in to next week.
Dax futures dipped below 7776 but only as far as 7762 as the outlook starts to weaken. Support today is at 7766/60 and below here 7730 could hold initially but a break lower targets 7687. Failure here could offer a very good buying opportunity at 7668 with a bounce expected.
Above 7802 we hit resistance at 7825/27 which should be a struggle today with the outlook starting to weaken. Watch for a high but if we break look for 7862/69. A break through the highs of 7888 runs in to further resistance at 7896/7906 which should hold the top.
FTSE future continued lower holding on to 6230 as we bottomed at 6234 but the outlook going in to February is starting to weaken.
6234 is where we meet the 9 day moving average today so move below 6230 is possible and weakens the market further. We should then see good support for the day at 6210/08 which could mark the low if tested so worth exiting all shorts and buying in to small longs with a stop below 6190 for 6175. Failure here then targets 6145 and this level should support for the week if we fall this far.
Resistance now at 6275 but above here we could try for a retest of the 6306/6315 highs. A break above here is very unlikely now with Wednesday’s reversal but would take us back into mid 2008 territory with targets of 6359 and then 6396 which was a high in May 2008. We start to hit some very heavy congestion here.
S&P is overbought with Wednesday’s reversal providing a possible sell signal. Support at 1491/90 was tested and held as did 1500 on the bounce as expected.
In the short term the failure to get back through 1500 yesterday means we have formed a bearish head & shoulders pattern. As long as we hold below 1500 we will test support at 1491/90 today. A break below here then confirms a move to 1476 in to next week. This is good support and so we look for a bounce from here.
The 9 day moving average is at 1495 today, we have not closed below it this month, so watch for a close below here tonight to provide another negative signal for next week. 1500 remains tough resistance but 1503 could hold if tested and the H&S pattern would still be intact. Only a break and close above 1506 can save bulls in the short term for a run to the next target of 1510/11.
Dow Jones Industrial Average Future broke support at 13863/859 after the bearish reversal on Wednesday but
held on to 13776/756 support where we did expect a low for the day. However a break lower today could trigger sell stops and see us trade down to 13655/640. Here we meet excellent daily support so little chance of us
falling any further and a good chance of a bounce. If we do break however look for 13575 next.
We have not closed below the 9 day moving average since December. It is at 13802 today so a weekly close tonight below here has negative implications for next week’s trading.
Resistance at 13843/850 should be tough to beat but a break meets resistance again at 13875/885. We should
try shorts here with a stop above 13895 for 13919 highs which look likely to cap again if tested.