Stock markets break higher and top exactly at our upside targets
Last week I wrote about my short-term bullish projection for the E-mini S&P: ‘If we can just break through the 1940/1945 area we should be able to target 1955 and possibly make it as far as strong resistance at 1970/1975. This should be enough to squeeze out any of the last weak short positions. It could also be enough to encourage some of the bigger funds to unload some of their positions in the face of a slowing global economy.’
This target was hit perfectly last week and we topped exactly here as expected.
For the E-mini Dow Jones I wrote: ‘E-mini Dow Jones is of course higher with the E-mini S&P and, if anything, has performed a little better, as we hover above the early February highs now. Although overbought, I’m looking for a push up through 16,650 to target 16,800 and maybe make it as far as 16,930/16,980.’
This market made it as far as 16,800, topping just above at 16,820, but unfortunately not quite as far as 16,930.
For the DAX I wrote: ‘The DAX 30 has been underperforming the US markets and has been in a bear trend for almost a year now. We made it to our first target and resistance in the 9530/9570 area and have come to a halt.’
The DAX underperformed yet again and was unable to beat the 9530/70, which held perfectly.
For the FTSE futures I wrote that ‘we see strong resistance… in the 6070/6100 area and it’s quite possible that the bear trend will resume once we approach this level.’
Again the FTSE topped exactly where we expected it to, at 6094. So where does this leave us now? Is this the start of the next leg lower for stock markets? Let’s start with the E-mini S&P.
The weekly chart clearly shows how the two-year trendline perfectly held the recovery as predicted. The first key support at 1930/25 is being tested as I write early today on Tuesday 1 March. Failure to hold this level adds pressure to the downside and targets the next support at 1890/85. This is crucial and a break below would signal further short-term downside pressure targeting 1845/40.
The E-mini Dow Jones is clearly in a 10-month bear trend already, just as the E-mini S&P is.
The move back below 16500 this week signals the three-week recovery is likely to be over as the bears resume control. A break below 16400 also breaks a short-term two-week bull channel to target 16305/16295 then support at 16150/130. A break below here should increase downside pressure to target 16000/15980 over the next week or two.
DAX futures have failed to beat 9530/9570, topping almost exactly here at 9586 last week. Back below 9370 this week adds pressure to target support at 9280/9250. Failure here however could see us re-test last week’s low at 9120.
FTSE March futures could now be headed for important short-term support at 5940/5930. Failure here adds pressure to target the next support at 5840/5830. This is the last line of defence for bulls. A break below clearly puts bears back in full control and initially targets 5700/5690.
Technical Analyst & Trader
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