Technicals

NASDAQ Looks To Extend Gains With Little Ressitance Ahead

The Dow gains have been slowed by resistance at 10,586- 61.8% Fibo extension of 13,136-6,460. The technical level could prove formidable considering it is the golden ratio of a major decline. Downside risk are to 10,400 where we find trendline support, a break above exposes 10,750 followed by 11,000.

The S&P 500 like the Dow has broke from its short-term wedge but is facing resistance at 1,144-61.8% Fibo of 1,440-665. A break above exposes 1,175, with downside risks to 1,100.

The NASDAQ continues to set fresh yearly highs and continues to be the outperformer of the U.S. indices. However, this could make it more susceptible to a bout of risk aversion.  Possible trend line resistance at 2,415 could slow current momentum with psychological resistance at 2,400 in the way as well. The next major barrier is the August 15, 2008 high of 2,473 which could be tested before any major retracement.

Technicals

Dow Triangle Signals Potential Breakout

Recent Dow price action has developed a potential triangle formation which could signal the potential for a breakout.  The blue chip index appears to have breached the upper bound signaling a stronger move to the upside. However, this is a weak interpretation of the pattern which leaves us without significant conviction on the pending move. Nevertheless, a clear upward trend has emerged leaving potential to re-test 10,750.

The S&P 500 like the Dow is also in the midst of a bullish trend after finding trendline support. Look fro the continuation of the broader channel and a re-test of resistance at 1,144-61.8% Fibo.

The NASDAQ has broken resistance at 2,251-61.8% Fibo of 1,265-2,861 leaving the yearly high of 2,234as the next barrier. Continuation of the bullish trend leaves potential to 2,500.

Technicals

European Stocks Correct Higher, Bias Remains Bearish

WEEKLY STRATEGY

FTSE 100

Long-term Technical Outlook

The FTSE is testing channel support and a break below would strongly suggest that the advance from the 2009 low is complete. The rally is in 5 waves and is therefore probably just the first wave of a larger correction (b wave underway now). Initial support is 4955.

Short-Term Technical Outlook

The FTSE has found near-term support at 5316.79, the 50% Fibonacci retracement of the downswing from the swing high in mid-January. Near-term resistance remains at 5383.72, the 61.8% Fib reinforced by support-turned-resistance at the bottom of a previously broken rising channel. Negative RSI divergence argues for a bearish bias. A break lower exposes the 38.2% mark at 5249.86.

DAX

Long-term Technical Outlook

The DAX is in the same position as the FTSE. The index is testing channel support now and dropping below would suggest that the rally from the 2009 low is complete as an A wave. Initial support is 5159.

Short-Term Technical Outlook

German shares broke down below the lower boundary of a rising channel that had been guiding prices higher since the beginning of the month, with prices now stalling above the 38.2% Fibonacci retracement of that rally at 55702. Continued selling will target 55260, the 61.8% Fib level.

CAC 40

Long-term Technical Outlook

The CAC 40 has dropped below trend line support and a large B wave may be underway now towards 3398. Favor the downside against the January high.

Short-Term Technical Outlook

The French benchmark index found support at the bottom of a rising channel that has been guiding the move higher since the beginning of the month, a level reinforced by the 38.2% Fibonacci retracement level at 3697.72. A push lower will target the 50% Fib at 3668.73, while near-term resistance is found at the channel’s mid-line (now at 3757.56).

IBEX 35

Long-term Technical Outlook

After reversing in January, the IBEX has declined in impulsive fashion. Additionally, RSI divergence on the weekly suggests that the top is important. Favor the downside. The next support is 993.

Short-Term Technical Outlook

The IBEX corrected slightly higher to meet near-term resistance at 1025.14, the 23.6% Fibonacci retracement of the latest down leg. A break above this boundary exposes the 38.2% Fib at 1035.11, while near-term support is marked by the last swing low at 1009.01.

S&P/MIB

Long-term Technical Outlook

The FTSE/MIB reversed from the 38.2% retracement of the decline from the 2007 high and has fallen beneath channel support. The drop below channel support indicates that the path of least resistance is lower. The next level of support is 20702.

Short-Term Technical Outlook

Italy’s benchmark index has retraced a bit higher after breaking out of a rising channel that had framed the upswing from the lows set earlier this month. Near term resistance stands at 21349.62, the 38.2% Fibonacci retracement of the 02/08-02/22 rally, and reinforced by the channel’s lower boundary. Near-term support lines up at 21180.81, the 50% Fib.

Technicals

European Stocks to Extend Decline as Prices Clear Key Support

WEEKLY STRATEGY

FTSE 100

Long-term Technical Outlook

The FTSE is testing channel support and a break below would strongly suggest that the advance from the 2009 low is complete. The rally is in 5 waves and is therefore probably just the first wave of a larger correction (b wave underway now). Initial support is 4955.

Short-Term Technical Outlook

The FTSE has put in an Evening Star candlestick formation below resistance at 5383.72, the 61.8% Fibonacci retracement of the downswing from the swing high in mid-January reinforced by support-turned-resistance at the bottom of a previously broken rising channel. A break below the 50% Fib at 5316.79 exposes the 38.2% mark at 5249.86.

DAX

Long-term Technical Outlook

The DAX is in the same position as the FTSE. The index is testing channel support now and dropping below would suggest that the rally from the 2009 low is complete as an A wave. Initial support is 5159.

Short-Term Technical Outlook

German shares down below the lower boundary of a rising channel that had been guiding prices higher since the beginning of the month, with prices now working negotiating the 38.2% Fibonacci retracement of that rally at 56144. Continued selling will target 55702, the 50% Fib level.

CAC 40

Long-term Technical Outlook

The CAC 40 has dropped below trend line support and a large B wave may be underway now towards 3398. Favor the downside against the January high.

Short-Term Technical Outlook

The French benchmark index has dropped toward support at the bottom of a rising channel that has been guiding the move higher since the beginning of the month. This juncture (now at 3682.82) is reinforced by the 23.6% Fibonacci retracement of the 01/11-02/08 decline, with a break lower opening the door for considerable downside to target the 3600.00 figure.

IBEX 35

Long-term Technical Outlook

After reversing in January, the IBEX has declined in impulsive fashion. Additionally, RSI divergence on the weekly suggests that the top is important. Favor the downside. The next support is 993.

Short-Term Technical Outlook

The IBEX has followed up a large Bearish Engulfing candlestick formation with a move below support at a rising trend line set from the swing low set earlier this month. Initial support now stands at 1023.09, the 23.6% Fibonacci retracement of the 02/03-02/05 downswing.

S&P/MIB

Long-term Technical Outlook

The FTSE/MIB reversed from the 38.2% retracement of the decline from the 2007 high and has fallen beneath channel support. The drop below channel support indicates that the path of least resistance is lower. The next level of support is 20702.

Short-Term Technical Outlook

The IBEX has followed up a large Bearish Engulfing candlestick formation with a move below support at a rising trend line set from the swing low set earlier this month. Initial support now stands at 1023.09, the 23.6% Fibonacci retracement of the 02/03-02/05 downswing.

Technicals

European Stocks Vulnerable as Prices Approach Resistance

WEEKLY STRATEGY

FTSE 100

Long-term Technical Outlook

The FTSE is testing channel support and a break below would strongly suggest that the advance from the 2009 low is complete. The rally is in 5 waves and is therefore probably just the first wave of a larger correction (b wave underway now). Initial support is 4955.

Short-Term Technical Outlook

The FTSE is approaching a critical upside barrier at 5383.72, the 61.8% Fibonacci retracement of the downswing from the swing high in mid-January, a level reinforced by support-turned-resistance at the bottom of a previously broken rising channel. Relative strength studies area heading into overbought territory, hinting that some manner of pullback may materialize in the near term. Initial support is seen at 5316.79, the 50% Fib.

DAX

Long-term Technical Outlook

The DAX is in the same position as the FTSE. The index is testing channel support now and dropping below would suggest that the rally from the 2009 low is complete as an A wave. Initial support is 5159.

Short-Term Technical Outlook

German are approaching key resistance at 57400, the top a near-term rising channel and the previous swing top from earlier this month. Negative RSI divergence suggests a move lower is likely from here, targeting the channel bottom at 56012.

CAC 40

Long-term Technical Outlook

The CAC 40 has dropped below trend line support and a large B wave may be underway now towards 3398. Favor the downside against the January high.

Short-Term Technical Outlook

The French benchmark index has pushed through resistance at 3764.00, the 76.4% Fibonacci retracement of the decline from February’s swing high, but negative RSI divergence suggests below falling trend line resistance bodes ill for continued bullish momentum. Initial support lines up at 3722.33, the 61.8% Fib.

IBEX 35

Long-term Technical Outlook

After reversing in January, the IBEX has declined in impulsive fashion. Additionally, RSI divergence on the weekly suggests that the top is important. Favor the downside. The next support is 993.

Short-Term Technical Outlook

The IBEX is approaching resistance at 1071.62, the 61.8% Fibonacci retracement of the down move from early February. Negative RSI divergence argues for a reversal lower at this juncture, with the initial downside barrier at the 50% Fib (1056.63).

S&P/MIB

Long-term Technical Outlook

The FTSE/MIB reversed from the 38.2% retracement of the decline from the 2007 high and has fallen beneath channel support. The drop below channel support indicates that the path of least resistance is lower. The next level of support is 20702.

Short-Term Technical Outlook

Italian issues has overcome resistance at the 61.8% Fibonacci retracement of the down move from this month’s swing high (21724.43), but a formidable barrier lines up nearby at the top of a rising channel formation. If bullish momentum persists, the next relevant boundary lines up at 22021.84, the 76.4% Fib retracement. Alternatively, a turn lower sees initial support at the 50% Fib level (21484.05).

Technicals

Dow’s Hammer Candle Warns Of Reversal

Testing support from a steep channel, a drop below would suggest that an important top is in place at 10730.  The next level of support is 9679, then 8878.  The level that produced the January top has been significant in recent years (2004-2006), which increases the likelihood that a more important is in place.

The Dow briefly broke below 10,000 to a low of 9,835 before retracing and closing back above the psychological level. The resulting hammer candle is typically a reversal sign which could see an extension of the bullish momentum that ended the week. However, another break below support would increase downside risks and expose 9,721-38.2% Fibo of 8,087-10,719 followed by 9,679-11/2 low.

The S&P has already broken below its channel, which reinforces the topping theme.  Just as the Dow’s January top occurred at a previously important level, so did the S&P top (see circled area).  The next level of support is 1029, then 956.  Favor the downside.

The S&P 500 like the Dow saw a significant retracement and a resulting hammer candle which is a reversal signal. The broader index found support at 1,043-38.2% Fibo of 869-1,150 which could prove to be solid support going forward. A break below exposes 1,029-11/2 low as the next barrier.

The NASDAQ has broken below a support line drawn off of lows in July and November.  RSI divergence on the weekly plot at the January high is also bearish.  The next level of support is 2024.

The NASDAQ has broken below the rising trend line and is looking to test support at 2,113-11/27 low followed by 2,024-11/2 low. Although not as pronounced as the other indices, the tech laden index also saw a hammer candle to end the week. So traders should watch for a short-term reversal before continuation of the broader bearish trend.

Technicals

Dow Threatens 10,000 Exposing Downside Risks

Testing support from a steep channel, a drop below would suggest that an important top is in place at 10730.  The next level of support is 9679, then 8878.  The level that produced the January top has been significant in recent years (2004-2006), which increases the likelihood that a more important is in place.

The Dow is threatening 10,000 and given the sharp bearish decline from yesterday there could be sufficient momentum to push the blue chip index below the monumental psychological level. A break below support would expose 9,721-38.2% Fibo of 8,087-10,719 followed by 9,679-11/2 low.

The S&P has already broken below its channel, which reinforces the topping theme.  Just as the Dow’s January top occurred at a previously important level, so did the S&P top (see circled area).  The next level of support is 1029, then 956.  Favor the downside.

The S&P 500 has cleared former congestion putting it on track to test support at 1,043-38.2% Fibo of 869-1,150 with the 1,029-11/2 low as the next barrier.

The NASDAQ has broken below a support line drawn off of lows in July and November.  RSI divergence on the weekly plot at the January high is also bearish.  The next level of support is 2024.

The NASDAQ has broken below the rising trend line and is looking to test support at 2,113-11/27 low followed by 2,024-11/2 low.

Technicals

U.S. Equities Threatening Support Levels

Testing support from a steep channel, a drop below would suggest that an important top is in place at 10730.  The next level of support is 9679, then 8878.  The level that produced the January top has been significant in recent years (2004-2006), which increases the likelihood that a more important is in place.

After a period of support the Dow has seen its advance slowed by resistance at 10,333-50.0% Fibo of 14,198-6,469.  A break below support would expose 9,679-11/2 low but that may follow a period of consolidation.

The S&P has already broken below its channel, which reinforces the topping theme.  Just as the Dow’s January top occurred at a previously important level, so did the S&P top (see circled area).  The next level of support is 1029, then 956.  Favor the downside.

The S&P 500 is looking to break below trend line support as it has started to consolidate. A break below leaves support at 1,029-11/2 low.

The NASDAQ has broken below a support line drawn off of lows in July and November.  RSI divergence on the weekly plot at the January high is also bearish.  The next level of support is 2024.

The NASDAQ has found support from the rising trend line but the bearish trend remains intact and another test of the level could lead to a break below. The next level would be found at   2,113-11/27 low followed by 2,024-11/2 low.

Technicals

Is A Dow Top In Place?

Testing support from a steep channel, a drop below would suggest that an important top is in place at 10730.  The next level of support is 9679, then 8878.  The level that produced the January top has been significant in recent years (2004-2006), which increases the likelihood that a more important is in place.

The S&P has already broken below its channel, which reinforces the topping theme.  Just as the Dow’s January top occurred at a previously important level, so did the S&P top (see circled area).  The next level of support is 1029, then 956.  Favor the downside.

The NASDAQ has broken below a support line drawn off of lows in July and November.  RSI divergence on the weekly plot at the January high is also bearish.  The next level of support is 2024.  

Technicals

FTSE Near-Term Positioning Favors The Downside

The FTSE is testing channel support and a break below would strongly suggest that the advance from the 2009 low is complete.  The rally is in 5 waves and is therefore probably just the first wave of a larger correction (b wave underway now).  Initial support is 4955.

FTSE near-term positioning favors the downside as prices trend lower in a falling channel. Near-term resistance is seen at 5511.66, the channel top, while support is found in the 5440.22-5455.37 congestion region. A below this barrier exposes 5390.58.

The DAX is in the same position as the FTSE.  The index is testing channel support now and dropping below would suggest that the rally from the 2009 low is complete as an A wave.  Initial support is 5159.

German shares have trended lower since breaking below rising trend line support, with price action guided by a well-defined falling channel. Prices have come off the bottom of the formation to re-test support-turned-resistance at 59350. Renewed bearish momentum from here will target another test of the channel’s lower boundary, this time at 58452.

The CAC 40 has dropped below trendline support and a large B wave may be underway now towards 3398.  Favor the downside against the January high.

As with its German counterpart, the CAC has broken below rising trend line support and is being guided lower by a falling channel. A bounce from the channel bottom has stalled below support-turned-resistance at 3979.15, with renewed selling to target 3933.91.

After reversing in January, the IBEX has declined in impulsive fashion.  Additionally, RSI divergence on the weekly suggests that the top is important.  Favor the downside.  The next support is 993.

Madrid issues are positioned broadly in line with the DAX and CAC: prices have taken out rising trend line support and are trending lower bounded by a falling channel. Near-term support has been found at 1185.46, the 50% Fibonacci retracement level, with an upswing to aim for the 38.2% Fib at 1194.56. Alternatively, a break lower exposes the 61.8% Fib at 1176.35.

The FTSE/MIB reversed from the 38.2% retracement of the decline from the 2007 high and has fallen beneath channel support.  The drop below channel support indicates that the path of least resistance is lower.  The next level of support is 20702.

Italy’s benchmark index seems to be stalling behind its counterparts in Germany, France and Spain. Indeed, while those indexes have broken lower, the FTSE/MIB continues to test rising trend lie support, with the hurdle reinforced by the 23.6% Fibonacci retracement level. Nonetheless, cues from other major exchanges suggest the path of least resistance leads lower, with the next level of relevant support on a breakdown past current levels found at the 38.2% Fib (23040.84).

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