Indices Highlights:
- S&P 500 looks to keep on making news highs into final month of the year
- DAX to try and close corona-gap, hit new record high
- FTSE basing ahead of big resistance test dating back to 2018
The S&P 500 continues to hover in record territory as we close in on the final month of 2020. The bottom line at this time is the path of least resistance is higher, and with seasonality also favorable it appears likely there will remain a bid in the final frame of the year.
As for resistance, even though in record territory, the trend-line running over from the pre-coronavirus record high could act as a small hurdle. But generally speaking it is hard to say how high the market could rise from here.
Even though the outlook is bullish we must remain vigilant and continue to keep one eye on the downside. A break below the recent congestion (<3515) would be viewed as a negative, and could see selling push the S&P down to test the March trend-line.
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S&P 500 Daily Chart (path of least resistance = up)
S&P 500 Chart by TradingView
The DAX is working on breaking through multi-month resistance and filling the coronavirus gap at 13579 before possibly testing and breaking the prior record high at 13795. With the general tone set for higher equity prices this is seen as having a high likelihood of occurring. A breakdown below 13004 would be a reason to turn defensive, with potential increasing for a larger pullback.
DAX 30 Daily Chart (coronavirus gap-fill & record high in sight)
DAX Chart by TradingView
Since launching higher in the first half of November the FTSE has gone into consolidation mode just below significant resistance around the 6536 mark. The 2018 low briefly held back in March before turning into resistance in June. A breakout above resistance should keep the FTSE trending higher.
FTSE 100 Daily Chart (consolidating around resistance)
FTSE Chart by TradingView
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—Written by Paul Robinson, Market Analyst
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