Erratic, but lacklustre rebound efforts leave global equities vulnerable

Intermediate
  • For a second successive session on Friday, European and US equity markets attempted rebound and recovery rallies.
  • However, once again, markets have been unable to send any notably positive technical signals, with bounces seen as corrective at best, advances remaining lacklustre in nature and leaving global equities vulnerable to renewed bearish forces through month-end and into early November.
  • Here we focus on the German benchmark average, the DAX and the broad US yardstick, the S&P 500.

 

DAX (Dec’ ’18 contract)

Bear trend intact

An erratic Friday with a prod lower to another new cycle low and then a modest rebound effort, to maintain bear forces from Wednesday’s significant selloff through notable support at 11122.5 and to keep short-term risks to the downside Monday.

The selloff through 12024 and also the cycle low at 11846 set an intermediate-term bear trend.

For Today:

  • We see a downside bias for 11125 and 11035; break here quickly aims for 11000, then 10961.5 and maybe 10891.
  • But above 11280.5 opens risk up to 11364, maybe towards the bear gap at 11425-483.

Intermediate-term Outlook – Downside Risks: We see a downside risk for 10406.5 and 10000/9994.5.

  • What Changes This? Above 11838 shifts the intermediate-term outlook to neutral and above 11194.5 to a bull theme.

4 Hour Chart

DAX Screenshot 2018-10-28

S&P 500 E-Mini (Dec’ ’18 contract)

Bear trend extends, leaving downside risks

A whipsaw Friday with an extension lower to a new cycle low through 2652.5/50.0 support, then to rebound from just above the key up trend line from 2016 now at 2625.0, and although overcoming minor resistance, to stall below the 2700/01 resistance area at 2692.75, sustaining bear pressures from the October selloff, keeping risks lower for Monday.

The extremely aggressive selloff through 2853.5 and multiple intermediate-term supports in early October set an intermediate-term bear trend

For Today:

  • We see a downside bias for 2641.0 and 2627.5; break here aims for the key up trend line from 2016 at 2625.0. Below targets 2600.0 and even 2591.25.
  • But above 2692.75 opens risk up to 2700.01, maybe 2723.75.

Intermediate-term Outlook – Downside Risks: We see a downside risk for key 2624.0.

  • Lower targets would be 25 and 2552.0, maybe even 2529.0.
  • What Changes This? Above 2824.25 shifts the outlook back to neutral; above 2889.5 is needed for a bull theme.

4 Hour Chart

S&P Screenshots 2018-10-28

Steve Miley

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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