England

European Stock Exchanges Position to Reverse Lower

Weekly Strategy

FTSE 100

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 4751, has been reached and is where the rally from 4096 is equal to 61.8% of the 3461-4521 rally.  The next level is 5156, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

The FTSE is setting up a Rising Wedge chart formation indicative of a bearish reversal ahead. Negative divergence on the RSI oscillator bolsters the downward bias. Near-term support is seen at 4888.90.

DAX

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 5506, has nearly been reached and is where the rally from 4524 is equal to 61.8% of the 3589-5176 rally.  The next level is 6113, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

As with the FTSE, the German benchmark index is showing a bearish Rising Wedge with negative RSI divergence. A break of support at 55023 opens the door for a move to resistance-turned-support at 54420.

CAC 40

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 3535, has been reached and is where the rally from 2958 is equal to 61.8% of the 2466-3400 rally.  The next level is 3892, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

Another rising wedge is seen on the CAC 40, again with negative RSI divergence. Near-term support is seen at 3668.40. A break below this will likely see a test of the psychologically significant 3600.00 handle.

IBEX 35

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 1124, has nearly been reached and is where the rally from 925 is equal to 61.8% of the 670-993 rally.  The next level is 1247, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

Spanish shares fit in with positioning noted on other key exchanges: a Rising Wedge points to a bearish bias, and negative RSI divergence offers confirmation. A break below the wedge bottom at 1141.81 opens the door for a move to the 23.6% Fibonacci retracement level (1128.42).

FTSE MIB

Long-Term Technical Outlook

There are 2 levels that most likely produce a top and neither has been reached.  The first level, 22798, is where the rally from 17626 is equal to 61.8% of the 12332-20702 rally.  The next level is 25996, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

The FTSE/MIB looks essentially the same as other European benchmarks, with a Rising Wedge and negative RSI divergence clearly in place. A move below the wedge bottom at 22609.38 will aim below the 22500.00 handle.

England

Daily Commodities Fundamentals: Risk Appetite Drives Crude, Metals Higher

North American Commodity Update, Last Updated 7/27/2009 3:40 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Prices End Slightly Higher, Testing $69 During Intraday

Crude Oil (WTI)   $68.300                         +$0.250                             +0.37%
Crude Oil future prices edged higher during today’s trading session, managing to close with slight gains after testing levels all the way up to $69-per-barrel. Early this morning, Crude soared on an extremely upbeat US Home Sales report, which showed an 11% increase compared to an expected 3%. Inventories were also the lowest they have been in over a decade. However, around the same time, disappointing earnings reports emerged from both Verizon and Aetna, causing Crude to pare its previous gains. As has been the case for weeks, investors seem to be ignoring the fundamental lack of demand for Crude when pricing the commodity; despite the extremely low demand, speculation continues to drive future prices higher. Further gains are certainly not out of the question, as any upbeat fundamental data will drive Crude higher.

Upcoming Department of Energy Inventories

Commodities – Metals

Silver Outperforms Gold on Good Day for Metals

Gold                   $957.500                           +$1.600                           +0.17%
Gold future prices spiked to nearly $962-per-ounce during the Asian trading session before falling back near opening levels near $956. Gold saw initial gains due to falling risk aversion; the US dollar was down across the board today (excluding the Japanese Yen) as investors flock to higher yielding currencies. The prospect of a global economic recovery led to a bid up of the Australian dollar in particular during today’s session. Gold and the greenback often trade inversely as investors use the metal to hedge against dollar weakness/inflation. It seems as if Gold futures are attempting to break away from the psychological $950 level, but the absence of a significant catalyst has muted any real gains.

Silver                 $14.025                               +$0.150                          +1.08%
For the first time this month, Silver future prices broke above the $14-per-ounce level before retracing slightly. Silver is currently trading above the $14 level, a result of heightened economic optimism. Positive fundamental data doubly affects the metal, which functions as both a hedge against dollar weakness and an input in industrial production. An encouraging US Home Sales report coupled with a better-than-expected German GfK figure calmed investors nerves resulting from poor corporate earnings today. Silver may fall back below $14 as investors take the opportunity to sell, but bullish fundamental data could serve as a support.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

England

Daily Commodities Fundamentals: Crude Soars, Gold Slips, Silver Slightly Up

North American Commodity Update, Last Updated 7/23/2009 3:54 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Prices Push Forward, Testing $69 During Intraday

Crude Oil (WTI)   $67.180                         +$1.780                             +2.72%
Crude Oil future prices saw significant gains today after encouraging fundamental economic data and corporate earnings were released. Crude reached levels near $69-per-barrel during intraday trading before retracing slightly back near $67, still over a 2.5% gain during the session. US Existing Home Sales, which exceeded expectations by 50,000, proved to be a significant market-mover for Crude prices. Less than an hour later, the Bank of Canada’s Monetary Policy Report provided extremely bullish sentiment in the market, stating that the recession would end this quarter.  The report came in conjunction with additional corporate earnings that exceed analyst expectations, led by AT&T and Ford. Equities all pushed higher as a result, with the Dow surpassing the psychological 9000 level for the first time since January. If Crude can hold strong through tomorrow’s session, it will have added over 10% since 7/10.

Upcoming Department of Energy Inventories

Commodities – Metals

Gold Stuck Near $950, Silver Gains Modestly

Gold                   $950.500                           -$2.800                           -0.29%
Gold future prices did not perform as well as expected today, trading generally sideways yet again. During today’s session, Gold hit a 6-week high immediately following the surprising fundamental data releases. However, the metal could not hold onto its gains, falling from near $957-per-ounce back to around $952, marking a slight decline on the day. For weeks, Gold has been trading inversely with US dollar strength as investors waver between risk aversion and risk appetite. The reason for Gold’s standstill is two-fold; the US dollar was mixed across the board today, beating safe-haven currencies like the Yen and the Franc but losing badly to the Canadian dollar. Additionally, recent inflationary reports have signaled that price growth has been controlled; Gold usually thrives upon inflation concern, as investors use the metal to hedge.

Silver                 $13.770                    +$0.070                          +0.51%
Silver future prices continued to pass higher today, adding another modest gain to what’s becoming an impressive run for the metal. Dollar weakness was not the driving force behind Silver’s gain today; rather, the prospect of a global economic recovery led to a bid up of the dually useful metal. As mentioned yesterday, the UK Retail Sales figure had potential to be market moving today. The release was just one of numerous fundamental data reports that contributed to Silver’s gain today, as US Existing Home Sales and the Bank of Canada’s Monetary Policy also propped up Silver future prices. Tomorrow could end another successful week for Silver; since 7/10, Silver has added nearly 9%.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

England

European Stocks Rebound Tentatively Higher – Where to From Here?

Weekly Strategy

FTSE 100

Long-Term Technical Outlook

The FTSE rally from 3461 most likely completed wave 4 within a 5 wave decline from the 2007 high.  Expectations are for wave 5 to drawn the index to a new low (below 3461).

Short-Term Technical Outlook

The FTSE has rebounded from significant support at the intersection of the 100-day moving average and the 38.2% Fibonacci retracement level. Near-term resistance is seen at 4279.63, a falling channel top.

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100.  The rally from the March low counts well as wave 4 within the 5 wave decline from the 2007 high.  Moreover, the decline from 5178 (on short term charts) unfolded as an impulse (5 waves).

Short-Term Technical Outlook

German shares have rebounded from near-term support at the intersection of the 38.2% Fibonacci retracement level and the lower boundary of a falling channel. Initial resistance is seen at 48497, the channel top.

CAC 40

Long-Term Technical Outlook

I’ve made a change to the labeling for the CAC 40. The change brings the count in line with that of the DAX and FTSE counts.  The rally from 2465 was wave 4 of (3).  Wave 5 of (3) is considered underway towards a new low as long as 3400 remains intact.

Short-Term Technical Outlook

The French benchmark index has rebounded from the lower boundary of a falling channel to meet support-turned-resistance at the 38.2% Fibonacci retracement level. A break higher will aim to challenge the channel top, now at 3134.

IBEX 35

Long-Term Technical Outlook

The IBEX 35 appears to have already completed 5 waves down from its 2007 high.  However, the decline could extend (like the CAC 40 appears to be doing).  The continued divergence with RSI at the recent high also favors weakness going forward.

Short-Term Technical Outlook

Spanish shares are positioned above support at the 23.6% Fibonacci retracement level (91848), with negative divergence on the RSI oscillator hinting at a bearish bias. Near-term resistance is seen at 99294, the 07/01 high.

FTSE MIB

Long-Term Technical Outlook

The rally from the March low in the FTSE / MIB index was a 4th wave.  In line with other European indexes, the Milan index is expected to drop to a new low (below 12343).

Short-Term Technical Outlook

Italian shares have found support at the 100-daysimple moving average. Initial resistance is seen in the 18459.31 – 18752.00 congestion region, an area that previously served as support.

England

European Stocks Cling to Familiar Levels, Bearish Bias Favored

FTSE 100

Long-Term Technical Outlook

The FTSE is at risk of at least a pullback if not an outright reversal as daily RSI has rolled over from overbought territory.  At best for bulls, the FTSE decline will be a B wave.  At worst, the drop will be the next leg of the longer term bear.  The rally from the low is not clearly impulsive, so the latter certainly is possible.

Short-Term Technical Outlook

The FTSE has broken below support at 4270.63, the 23.6% Fibonacci retracement level. The UK benchmark index now targets the intersection of the 38.2% Fib and the 100-day moving average (4115.00).

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100.  The rally does look more like an impulse (5 waves) though, so the decline underway may be a B wave.

Short-Term Technical Outlook

German shares found near-term support at 46885, a familiar pivot level, and rebounded above the 23.6% Fibonacci retracement level. The door is now open for a return to the 14.6% Fib at 49495.

CAC 40

Long-Term Technical Outlook

The decline from the 2007 high in the CAC 40 is in 5 waves and either wave 1 or 5 is extended.  It seems more probably that wave 5 is the extended wave because if wave 1 were extended then wave 2 would be uncommonly small.  Either way, the index is most likely headed higher over the next several months but not before a sizeable correction of the gains from March.

Short-Term Technical Outlook

The French benchmark index has been trending lower in a narrow falling channel since breaking below support at a rising trend line that had guided the CAC since early March. A Hanging Man candlestick at the upper boundary of the channel suggests the next leg of the down move may be near, with initial support at the 100-day moving average.

IBEX 35

Long-Term Technical Outlook

Same story with the IBEX 35.  The rally from the low (6703) is corrective but is probably just the first leg of a larger correction.  The next several months should lead to a choppy B wave decline.

Short-Term Technical Outlook

The IBEX found near-term support at the 14.6% Fibonacci retracement level and has rebounded to re-test triple top resistance at 97240, a level now also bolstered the lower boundary of a previously broken rising channel. A Hammer candlestick at this juncture hunts at a move lower from here.

FTSE MIB

Long-Term Technical Outlook

The FTSE MIB (Milan) index took the same structure as the CAC 40 on the way down from its 2007 high.  The 200 day SMA has held as resistance and the index is headed lower in what is probable a B wave.

Short-Term Technical Outlook

Italian shares continue to try to resolve a favored directional bias around 18726.68, the 23.6% Fibonacci retracement level. A break lower would see near-term support at the 100-day simple moving average while a move higher will meet resistance at the psychologically significant 20000 level.

England

European Stocks Consolidate After Bearish Breakout

FTSE 100

Long-Term Technical Outlook

The FTSE is at risk of at least a pullback if not an outright reversal as daily RSI has rolled over from overbought territory.  At best for bulls, the FTSE decline will be a B wave.  At worst, the drop will be the next leg of the longer term bear.  The rally from the low is not clearly impulsive, so the latter certainly is possible.

Short-Term Technical Outlook

The FTSE has broken below support at 4270.63, the 23.6% Fibonacci retracement level. The UK benchmark index now targets the intersection of the 50% Fib and the 100-day moving average.

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100.  The rally does look more like an impulse (5 waves) though, so the decline underway may be a B wave.    

Short-Term Technical Outlook

German shares have surpassed support at 48066, the 23.6% Fibonacci retracement level. From here, prices target the 38.2% Fib at 45759.

CAC 40

Long-Term Technical Outlook

The decline from the 2007 high in the CAC 40 is in 5 waves and either wave 1 or 5 is extended.  It seems more probably that wave 5 is the extended wave because if wave 1 were extended then wave 2 would be uncommonly small.  Either way, the index is most likely headed higher over the next several months but not before a sizeable correction of the gains from March.

Short-Term Technical Outlook

The French benchmark index looks to have broken below resistance-turned-support at 313490. Bearish momentum now looks to extend to test the 100-day moving average at 301610.

IBEX 35

Long-Term Technical Outlook

Same story with the IBEX 35.  The rally from the low (6703) is corrective but is probably just the first leg of a larger correction.  The next several months should lead to a choppy B wave decline.

Short-Term Technical Outlook

The IBEX 35 reversed sharply lower on a re-test of broken support at the bottom of a rising channel. The bears now look to overcome the 14.6% Fibonacci retracement to expose the 23.6% level at 90279.

S&P/MIB

Long-Term Technical Outlook

The FTSE MIB (Milan) index took the same structure as the CAC 40 on the way down from its 2007 high.  The 200 day SMA has held as resistance and the index is headed lower in what is probable a B wave.

Short-Term Technical Outlook

Italian shares gapped below support at 18726.68, the 23.6% Fibonacci retracement level. From here the MIB targets the 38.2% Fib at 17504.66.

England

European Stocks to Extend Losses as Support Disintegrates

FTSE 100

Long-Term Technical Outlook

The FTSE is at risk of at least a pullback if not an outright reversal as daily RSI has rolled over from overbought territory. The rally from 3461 is likely to extend much higher over the summer months. But, will the advance carry more or less in a straight shot from current levels or will a pullback occur before the next advance? Remaining above 4295 keeps the FTSE 100 on a path towards 5106-5495 (50% and 61.8% of previous decline). A drop below 4295 would lead to a deeper decline in what is probably a B wave.

Short-Term Technical Outlook

The FTSE has broken below support at 4270.63, the 23.6% Fibonacci retracement level. The UK benchmark index now targets the intersection of the 50% Fib and the 100-day moving average.

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100. Staying above 4653 keeps the index headed higher towards 5870-6409. These levels are defined by the 50% and 61.8% retracements of the decline from the 2007 high. The 100% extension of the first leg of the advance (wave A, from 3589-4980) is in this zone at 6045.

Short-Term Technical Outlook

German shares have surpassed support at 48066, the 23.6% Fibonacci retracement level. From here, prices target the 38.2% Fib at 45759.

CAC 40

Long-Term Technical Outlook

The decline from the 2007 high in the CAC 40 is in 5 waves and either wave 1 or 5 is extended. It seems more probably that wave 5 is the extended wave because if wave 1 were extended then wave 2 would be uncommonly small. Either way, the index is most likely headed significantly higher over the next several months. The target zone is the former 4th wave, which is 441-5142. The 61.8% is in the middle of this zone at 4754. Near term, staying above 3115 keeps the trend pointed up. Coming under there would lead to a deeper decline in what is probably a B wave.

Short-Term Technical Outlook

The French benchmark index looks to have broken below resistance-turned-support at 313490. Bearish momentum now looks to extend to test the 100-day moving average at 301610.

IBEX 35

Long-Term Technical Outlook

Same story with the IBEX 35. The rally from the low (6703) is corrective but has more room to run. Staying above 8829 keeps wave C headed higher towards 1137-1247. This zone is defined by the 50%-61.8% retracements of the decline from the 2007 high. Wave C would equal wave A near the lower end of this zone at 1159.

Short-Term Technical Outlook

The IBEX 35 reversed sharply lower on a re-test of broken support at the bottom of a rising channel. The bears now look to overcome the 14.6% Fibonacci retracement to expose the 23.6% level at 90279.

S&P/MIB

Long-Term Technical Outlook

The FTSE MIB (Milan) index took the same structure as the CAC 40 on the way down from its 2007 high. The index is currently testing the 200 day SMA, which should give way as the target zone for the index is not until 30062-34711 (former 4th wave….wave 5 is extended). Remaining above 18752 keeps the trend pointed higher. Coming below there would lead to a deeper decline (next support would be 17133) before the next leg up.

Short-Term Technical Outlook

Italian shares gapped below support at 18726.68, the 23.6% Fibonacci retracement level. From here the MIB targets the 38.2% Fib at 17504.66.

England

European Stocks Find Near-Term Support, Stage Shallow Rebound

FTSE 100

Long-Term Technical Outlook

The FTSE is at risk of at least a pullback if not an outright reversal as daily RSI has rolled over from overbought territory. The rally from 3461 is likely to extend much higher over the summer months. But, will the advance carry more or less in a straight shot from current levels or will a pullback occur before the next advance? Remaining above 4295 keeps the FTSE 100 on a path towards 5106-5495 (50% and 61.8% of previous decline). A drop below 4295 would lead to a deeper decline in what is probably a B wave.

Short-Term Technical Outlook

The FTSE has found tentative support at 4270.63, the 23.6% Fibonacci retracement level. A break lower targets the intersection of the 50% Fib and the 100-day moving average.

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100. Staying above 4653 keeps the index headed higher towards 5870-6409. These levels are defined by the 50% and 61.8% retracements of the decline from the 2007 high. The 100% extension of the first leg of the advance (wave A, from 3589-4980) is in this zone at 6045.

Short-Term Technical Outlook

German shares have surpassed support at the bottom of a rising channel and are now testing 48066, the 23.6% Fibonacci retracement level. A break lower will target the 38.2% Fib at 45759.

CAC 40

Long-Term Technical Outlook

The decline from the 2007 high in the CAC 40 is in 5 waves and either wave 1 or 5 is extended. It seems more probably that wave 5 is the extended wave because if wave 1 were extended then wave 2 would be uncommonly small. Either way, the index is most likely headed significantly higher over the next several months. The target zone is the former 4th wave, which is 441-5142. The 61.8% is in the middle of this zone at 4754. Near term, staying above 3115 keeps the trend pointed up. Coming under there would lead to a deeper decline in what is probably a B wave.

Short-Term Technical Outlook

The French benchmark index has broken below the lower boundary of a rising channel. Prices now testing support / resistance at 313490, with a break lower targeting the 100-day moving average at 301057.

IBEX 35

Long-Term Technical Outlook

Same story with the IBEX 35. The rally from the low (6703) is corrective but has more room to run. Staying above 8829 keeps wave C headed higher towards 1137-1247. This zone is defined by the 50%-61.8% retracements of the decline from the 2007 high. Wave C would equal wave A near the lower end of this zone at 1159.

Short-Term Technical Outlook

The IBEX 35 has confirmed a double top at 97240 with a break below support at the bottom of a rising channel. Prices found near-term support at the 14.6% Fibonacci retracement and rebounded to re-test the broken channel’s lower boundary. A resumption of bearish momentum from here aims at the 23.6% Fibonacci retracement level (90279).

S&P/MIB

Long-Term Technical Outlook

The FTSE MIB (Milan) index took the same structure as the CAC 40 on the way down from its 2007 high. The index is currently testing the 200 day SMA, which should give way as the target zone for the index is not until 30062-34711 (former 4th wave….wave 5 is extended). Remaining above 18752 keeps the trend pointed higher. Coming below there would lead to a deeper decline (next support would be 17133) before the next leg up.

Short-Term Technical Outlook

Italian shares have broken below support at 19479.98, the 14.6% Fibonacci retracement level, to pause at the 23.6% Fib mark. A break lower from here targets the 38.2% Fib at 17504.66.

England

European Markets Find Tentative Support, Outlook Remains Bearish

FTSE 100

Long-Term Technical Outlook

The FTSE is at risk of at least a pullback if not an outright reversal as daily RSI has rolled over from overbought territory. The rally from 3461 is likely to extend much higher over the summer months. But, will the advance carry more or less in a straight shot from current levels or will a pullback occur before the next advance? Remaining above 4295 keeps the FTSE 100 on a path towards 5106-5495 (50% and 61.8% of previous decline). A drop below 4295 would lead to a deeper decline in what is probably a B wave.

Short-Term Technical Outlook

The FTSE has broken below support / resistance at 4307.61. From here, prices are now aiming at the 100-day moving average at 4109.84.

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100. Staying above 4653 keeps the index headed higher towards 5870-6409. These levels are defined by the 50% and 61.8% retracements of the decline from the 2007 high. The 100% extension of the first leg of the advance (wave A, from 3589-4980) is in this zone at 6045.

Short-Term Technical Outlook

German shares have surpassed support at the bottom of a rising channel and are now testing 48066, the 23.6% Fibonacci retracement level. A break lower will target the 38.2% Fib at 45759.

CAC 40

Long-Term Technical Outlook

The decline from the 2007 high in the CAC 40 is in 5 waves and either wave 1 or 5 is extended. It seems more probably that wave 5 is the extended wave because if wave 1 were extended then wave 2 would be uncommonly small. Either way, the index is most likely headed significantly higher over the next several months. The target zone is the former 4th wave, which is 441-5142. The 61.8% is in the middle of this zone at 4754. Near term, staying above 3115 keeps the trend pointed up. Coming under there would lead to a deeper decline in what is probably a B wave.

Short-Term Technical Outlook

The French benchmark index has broken below the lower boundary of a rising channel. Prices now testing support / resistance at 313490, with a break lower targeting the 100-day moving average at 301057.

IBEX 35

Long-Term Technical Outlook

Same story with the IBEX 35. The rally from the low (6703) is corrective but has more room to run. Staying above 8829 keeps wave C headed higher towards 1137-1247. This zone is defined by the 50%-61.8% retracements of the decline from the 2007 high. Wave C would equal wave A near the lower end of this zone at 1159.

Short-Term Technical Outlook

The IBEX 35 has confirmed a double top at 97240 with a break below support at the bottom of a rising channel. From here, prices aim at the 23.6% Fibonacci retracement level (90279).

S&P/MIB

Long-Term Technical Outlook

The FTSE MIB (Milan) index took the same structure as the CAC 40 on the way down from its 2007 high. The index is currently testing the 200 day SMA, which should give way as the target zone for the index is not until 30062-34711 (former 4th wave….wave 5 is extended). Remaining above 18752 keeps the trend pointed higher. Coming below there would lead to a deeper decline (next support would be 17133) before the next leg up.

Short-Term Technical Outlook

Italian shares have broken below support at 19479.98. The next level of support lines up at 18726.68, the 23.6% Fibonacci level.

England

UK Stocks Break Resistance, Spanish Shares Confirm Double Top

FTSE 100

Long-Term Technical Outlook

The FTSE is at risk of at least a pullback if not an outright reversal as daily RSI has rolled over from overbought territory. The rally from 3461 is likely to extend much higher over the summer months. But, will the advance carry more or less in a straight shot from current levels or will a pullback occur before the next advance? Remaining above 4295 keeps the FTSE 100 on a path towards 5106-5495 (50% and 61.8% of previous decline). A drop below 4295 would lead to a deeper decline in what is probably a B wave.

Short-Term Technical Outlook

The FTSE has broken below support / resistance at 4307.61. From here, prices are now aiming at the 100-day moving average at 4109.84.

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100. Staying above 4653 keeps the index headed higher towards 5870-6409. These levels are defined by the 50% and 61.8% retracements of the decline from the 2007 high. The 100% extension of the first leg of the advance (wave A, from 3589-4980) is in this zone at 6045.

Short-Term Technical Outlook

German shares have surpassed support at the bottom of a rising channel and are now testing 48066, the 23.6% Fibonacci retracement level. A break lower will target the 38.2% Fib at 45759.

CAC 40

Long-Term Technical Outlook

The decline from the 2007 high in the CAC 40 is in 5 waves and either wave 1 or 5 is extended. It seems more probably that wave 5 is the extended wave because if wave 1 were extended then wave 2 would be uncommonly small. Either way, the index is most likely headed significantly higher over the next several months. The target zone is the former 4th wave, which is 441-5142. The 61.8% is in the middle of this zone at 4754. Near term, staying above 3115 keeps the trend pointed up. Coming under there would lead to a deeper decline in what is probably a B wave.

Short-Term Technical Outlook

The French benchmark index has broken below the lower boundary of a rising channel. Prices now testing support / resistance at 313490, with a break lower targeting the 100-day moving average at 301057.

IBEX 35

Long-Term Technical Outlook

Same story with the IBEX 35. The rally from the low (6703) is corrective but has more room to run. Staying above 8829 keeps wave C headed higher towards 1137-1247. This zone is defined by the 50%-61.8% retracements of the decline from the 2007 high. Wave C would equal wave A near the lower end of this zone at 1159.

Short-Term Technical Outlook

The IBEX 35 has confirmed a double top at 97240 with a break below support at the bottom of a rising channel. From here, prices aim at the 23.6% Fibonacci retracement level (90279).

S&P/MIB

Long-Term Technical Outlook

The FTSE MIB (Milan) index took the same structure as the CAC 40 on the way down from its 2007 high. The index is currently testing the 200 day SMA, which should give way as the target zone for the index is not until 30062-34711 (former 4th wave….wave 5 is extended). Remaining above 18752 keeps the trend pointed higher. Coming below there would lead to a deeper decline (next support would be 17133) before the next leg up.

Short-Term Technical Outlook

Italian shares have broken below support at 19479.98. The next level of support lines up at 18726.68, the 23.6% Fibonacci level.

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