- Global equity averages sold off heavily on Tuesday, with many of the major averages in Asia, Europe and the US pushing below the bear selloff lows posted in early October.
- Although this activity has reinforced the intermediate-term bear trends on one hand, the intraday rebounds actually set markets up for further recoveries into Thursday and maybe Friday.
- From a technical analysis perspective, intermediate-term bear themes are very much intact, but there are hints that the turnarounds seen Wednesday could see the beginning of a more sustainable basing phase.
- Here we look at the DAX and S&P 500.
DAX (Dec’ ’18 contract)
Intermediate-term bear trend extends, but bounce bias
A Tuesday bear gap (now 11425-483) to plunge through the cycle low at 11383 and notable support at 11380, to reinforce our intermediate-term bear outlook, but then an intraday rebound from 11216 to partially close the opening bear gap and to leave the bias for a further rebound higher Wednesday.
The selloff through 12024 and also the cycle low at 11846 set an intermediate-term bear trend.
- We see an upside bias for the resistance gap at 11425-483, then towards 11600/05; break here aims for 11686.5.
- But below 11300 opens risk down to 11216, maybe towards 11176.
Intermediate-term Outlook – Downside Risks: We see a downside risk for 11122.5 and 11000, then deeper to 10406.5
- What Changes This? Above 11838 shifts the intermediate-term outlook to neutral and above 11194.5 to a bull theme.
4 Hour Chart
S&P 500 E-Mini (Dec’ ’18 contract)
Intermediate-term bear trend reinforced, but rebound threat
A plunge lower Tuesday reinforce our intermediate-term bear outlook with the extension below the cycle low at 2712.25 and just through firm 2018 swing support at 2696.75, but then a very solid intraday rebound has indicated a very short-term downside rejection and shifts risks back higher for Wednesday.
The extremely aggressive selloff through 2853.5 and multiple intermediate-term supports in early October set an intermediate-term bear trend
- We see an upside bias for 2754.75, then 2782.0; break here aims for 2800.5, maybe towards 2807.25.
- But below 2736.75 targets 2720/19 and opens risk down to 2692.25, maybe 2683.75.
Intermediate-term Outlook – Downside Risks: We see a downside risk for 2716.5.
- Lower targets would be 2696.75 and 2683.75, maybe even 2606.25
- What Changes This? Above 2824.25 shifts the outlook back to neutral; above 2889.5 is needed for a bull theme.
4 Hour Chart
Read more forex analysis