- S&P 500 heading towards big test with September low
- DAX following through on a head-and-shoulders pattern
- FTSE fell out of the channel formation, looking lower
The S&P 500 has been in roll-over mode since failing to rise above the previous record high. The gap seen this last week through the March trend-line has the September low at 3209 in focus. It will be a big test, as a lower-low could end up turning the tables quite a bit towards an extended decline, even if initially following a lower-low we see some type of recovery bounce. The 200-day MA would be next up as support in the lower-low scenario, currently at 3129. Should the September low not get breached we could see some stabilization out of stocks, but clarity will still be lacking. With the U.S. presidential election on Tuesday, traders will want to be extra vigilant as large sporadic swings could be in order in the futures market on Tuesday night into Wednesday.
S&P 500 Daily Chart (watch out for a lower-low)
S&P 500 Chart by TradingView
The DAX is following through on the head-and-shoulders pattern we’ve been tracking as of late. There is minor support not too far below at 11235 that looks likely to get tested here very soon. To turn the picture bullish it will require a good deal of work out the DAX as Europe is leading the downside in global equities.
DAX 30 Daily Chart (following through on H&S pattern)
DAX Chart by TradingView
For some time the FTSE for remained stuck in a descending channel that kept selling in check, but during this past week the underside of the formation was breached. This could lead to some more extension towards the long-term trend-line from the 1980s and the March lows. Before reaching those longer-term thresholds there is some minor support just under 5400 to watch. Like the other indices, it will take a decent amount of recovery and holding before conviction can come in on the long-side.
FTSE 100 Daily Chart (below channel, looking towards March levels)
FTSE Chart by TradingView
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—Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at@PaulRobinsonFX