Photo - Andreas Zanin
Andreas Zanin
Analysis, Weekly Market Updates | January 22, 2024

DAX 40 & DOW JONES: weekly analysis 22nd – 26th January

Market movers

Despite the Fed’s aggressive speeches and stronger-than-expected retail sales, which led the market to retreat from rate cuts expectations, the major stock exchanges posted new all-time highs, thanks to the performance of the semiconductor sector and the development of the AI trend.

Throughout the week, we will have some crucial macroeconomic data, and the quarterly earnings season will continue to unfold.

On Monday 22 January, we will have the PBOC interest rates in China and a speech by the president of the ECB, Christine Lagarde.

On Tuesday 23 January, a crucial event is scheduled for Japan: the BoJ monetary policy meeting. While it might be premature to expect a change in the interest rate policy, investors will be assessing any clues the BoJ President might provide regarding the potential end of the negative rate policy. Furthermore, Japan remains the only country in the world with rates in negative territories.

On Wednesday 24 January, Germany, the European Union, and the United States are set to release their respective PMIs for the Manufacturing sector.

The Bank of Canada will meet on Wednesday, January 24, to give its first-rate announcement for 2024. The central bank left interest rates unchanged at 5% in the December meeting, which marks the 4th consecutive rate hold of the year. Expectations are that the BOC will keep interest rates steady, potentially until mid-2024, as inflation rises once again in Canada to 3.4%, squashing hopes of an early loosening to monetary policy. The market will be looking for any clues over the timing of the first rate cut.

On Thursday 25 we will have additional important data for Germany with the release of the IFO business climate index.

The ECB meeting will focus on how policymakers will react to current market pricing, given the stock discrepancy between market rate cut expectations and official ECB comments. Since the December ECB meeting, microdata has broadly been in line with expectations, including the re-acceleration of headline inflation. The central bank is expected to leave interest rates unchanged and may give very little away about the timing of any upcoming rate cuts, reiterating that the job is not yet done for the ECB. The central bank is likely to be cautious, given the opposing factors that could impact inflation, including weaker demand but also possible inflationary pressures as a result of tensions in the Middle East.

In the United States, a series of important data will be released: durable goods orders, GDP QoQ, initial jobless claims, and building permits.

On Friday 26 January, we will evaluate inflation data for Japan along with the minutes of the monetary policy meeting.

In the United States, we will have the PCE Core, the Federal Reserve’s preferred gauge for inflation, which will be the major focus for USD and US equity traders. While CPI inflation data ticked higher in December, core CPI continued to trend lower. Investors will be watching to see whether core PCE also cools further in December towards the Fed’s 2% target. Personal spending figures will also be under the spotlight, with strong numbers pointing to a resilient consumer, which could support the soft landing narrative.

Tesla and Netflix will report their Q4 earnings throughout the week.

Netflix is set to report earnings on 23 January. Wall Street is expecting an EPS of $2.24 on revenue of $8.71 billion. Netflix is expected to see continued growth from its password-sharing crackdown and its low-cost advertising subscription plan. The $6.99 price point for the ad-supported tier is an attractive low-priced option in a competitive market. Netflix recently announced that it had more than 23 million active users in the ad-supported tier, up from 15 million in November and 5 million in May. Subscription numbers, as always, will be in focus.

Tesla will report Q4 earnings on 24 January with forecasts of EPS at $0.74 on revenue of $25.76 billion. The figures come after and after earnings and revenue missed forecasts in the previous quarter. Tesla reported 485,000 deliveries for Q4 2023, an increase of around 20% compared to last year. However, the stock trades down 9% year to date as the EV market has been cooling off due to high interest rates making it more expensive to finance EVs and also owing to weaker consumer sentiment. Tesla has also cut some prices, which could hurt the bottom line as the Texan company is fighting to keep market share.

Weekly analysis and market scenarios for DAX and Dow Jones

2024 will be very important for the markets. There are several political elections in different regions of the world, starting from the United States of America to Iran, Mexico, Portugal, the United Kingdom, and about 50 other countries. Furthermore, attention will be focused on the war in Ukraine and Israel as well as the various issues in the Middle Eastern region. The year is expected to be positive for the stock markets with 4-5 months of sideways and bearish movement. Most likely the lows for the year will be posted at the end of the first semester. After that, markets should rise until the end of the year, reaching annual highs in December.

What will happen from now on? We are approaching a crucial period of the year for the stock market. Furthermore, since reaching the lows on 30 October, prices have not yet experienced a retracement of more than 3%. We believe that this event could be imminent and that January could close below its opening levels or even below the lows recorded in December.

From the lows of the week of March 13, the rise of the international stock exchanges has been incredible. The thesis that supported a lead to a very strong climb until August 4th, the annual setup, was confirmed with almost millimeter precision. Everything occurred as we predicted, and between September 2022 and March 2023, all international markets posted their temporary lows (which could also be the ten-year lows).

Beyond the rhetoric of the debt ceiling, the recession, and the banking crisis, only a decisive flip in sentiment could lead to a trend reversal. Earnings of US mega caps have shown off and many other companies are also ramping up the increase in revenue.

The average annual returns on international equities (World Stock Exchanges based on GDP) are around 11%. Current rates in America are more than 5%. With a projection for 10, 15, and 20 years, equity markets always beat bond markets. Therefore, we should be at the starting point of a 10-year bull market.

Rising interest rates won’t directly and inevitably lead to a recession. As long as these hikes are balanced with economic growth, there should be no danger. On the other hand, an exaggerated rate cut could drag down the markets for a long time.

The likely lows that were supposed to be posted in October 2022 will have a high probability of remaining so for many years. They could represent the lows of the entire decade. Despite a certain short-term overbought situation, the markets are unstoppable and will be like this for a long time. Here is why.

We have highlighted several times that stock prices tend to move at least 6/9 months before the economic cycle. For this reason, during the final part of 2022, the markets would have posted a significant bottom between June and October and then taken off again for the long term. The prices marked during the year had discounted the most unfavourable, geopolitical and geo-economic conditions.

During 2024, we expect an annual return of around 10 percent. The lows are likely to be posted between May and June, while peaks should be reached in December.

As always, we will confirm the annual forecast from time to time. The outlook for Wall Street in 2024 is marked by uncertainty and complexity, requiring investors to be constantly vigilant and flexible in their strategies. The capacity to adapt to changing market dynamics and navigate through global challenges will be crucial to the success of the financial environment in the coming months.

The S&P500 index posted new historical highs, reaching the 4874 area.

The new control zone is in 4867-873; closing above or below this latter level could determine new bullish lunges or a weekly corrective phase.

Below 4867 prices could post uncontrollable pullbacks; intermediate supports in areas 4854 and 4844-840.

New supports in area 4834-822-817 and 4807-4799.

New weekly support in the 4792-780 area. Additional supports in area 4774-768 and 4759.

The movement occurred on Monday 8th created a new support area in 4743. Intermediate support in area 4725.

Support area 4707-4700 confirmed. Key supports in the 4680 and 4660 areas. The latter becomes the monthly area.

The 4595-4607 area became the monthly control area, closing below it could lead to a significant corrective movement.

The supports in the 4592-4582 area are confirmed, the loss of this latter zone could lead to swift corrections up to the 4562-4552 support, crucial for the ongoing upward movement.

Additional supports in area 4542-4538 and 4528-4523.

4517-4510 and 4503-4494 confirmed. The support in the 4491-4474 area is critical, and the loss of this latter area could bring steep corrections. The target is the support in the 4428 area, which is confirmed as a monthly level.

Confirmed 4411-4409, 4397, 4390-388 and 4371-4384.

The 4363 level is confirmed, the breaking of this important level could lead to swift corrections towards 4334-4327, 4320-4315, 4303-4292 up to 4256, which remains a key support for the ongoing rally. Additional supports in areas 4244-4223, an overbought area,
4190-4185, and 4164-4158.

Late November support at 4138-4124 became the new monthly support. 4117 and 4100 are confirmed. Losing the latter support could lead to heavy drawdowns in the medium term.

Confirmed the supports in 3930-3905-3899, 3945-3957-3961, 3979, 3993-4000, and 4032-4043 areas. The 4064-4075 areas remain a crucial support for this year too.

3890-3879 is still a critical area because, in this specific area, buyers managed to concentrate. Additional support in 3864-3857 areas. Another intermediate zone is located in the 3822-3814 area.

Support in the 3808-3798 zone was confirmed, below which prices could start a new downward spiral.

Confirmed supports in 3669, 3680-3689-3701, 3711-3726-3733 areas.

3762 and 3711 are the monthly levels that support the current uptrend, so beware of any breakout of these levels: We could witness a new trend reversal.
The psychological support of 3600 remains crucial. The support at 3644-3651 has halted the fall and is now the monthly support after this solid uptrend. It shouldn’t be reached again, to avoid new and heavy downward movements. Below is the 3607 level. Then again, the 3557-3547, 3538-3524, and 3514-3507 are support levels. The 3485 support is now the annual, critical, and historical level for the S&P500 index. We will monitor whether this last level could stop, at least in the medium term, the bearish direction of the markets. Should we go beyond it, 3200-3300 will be the target, sought after by funds, investors, and traders halfway around the world.

Protecting 4792 will push prices towards new historical highs, the first target is 5000-5100 and then 5300-5500. New resistances in the 4876 area.

How to move? In recent days, a corrective phase that started was interrupted on Thursday 18 January. As we already mentioned, there were no apparent dangers until 6 January, but from this date onwards, a decline of even one or even two months could unfold. Despite the ongoing bullish strength, we will maintain a high level of attention until 31 January. A break in the weekly supports could lead to significant declines.

DE40 – Last week, the German index failed an attack on the weekly support 16416-306. Subsequently, it surged strongly upward following the path of the US indices, and closed on Friday in the 16643 area.

The control area is 16602-643. The positioning of the prices above or below the latter area could determine the weekly direction of the index.

New supports in the 16573-533 and 16498-440 area.

Support at 16416-306 confirmed which remains weekly. Only below this latter area, the Dax could begin a serious retracement.

Additional supports in the 16263-223, 16198-163 and 16132 area. These levels are great areas to look for long entries. Below 16132 prices can accelerate strongly downwards, towards the new critical support at 16025-15958.

15918-872 is confirmed, below this level, we could observe swift downward corrections with targets at the key volumetric supports of 15679-620 and 15589-533. Additional support in areas 15422-384 and 15315-252.

15130-097-070 and 15036-15000 confirmed. Monthly support in the 14935-895 area. Other supports in the 14874-801 and 14775-730 areas. 14662 and 14625-590 confirmed.

Confirmed intermediate supports 14138-184, 14342, 14414-545.

Critical area in the 13814-781 zone. The loss of the volumetric zone 14069-13974 opens the gateway to the monthly support in the 13621 area.

Solid supports in areas 13692-608, 13550-516, and 13457-410. Supports 13314-333, 13331-410, 13438-467 are confirmed.

Confirmed volumetric supports in areas 12865, 12833-12909, 12978-13038, 13113-178, 13222-280, 13307-357.

Confirmed the supports in area 12808-766. From 12628 to 12766, there are a series of intermediate supports, helpful for long entry from pullbacks. 12566 becomes monthly support.

Additional critical supports are 12407-517 for the concentration of volumes. 12353-275 is the first bullish turning zone. Confirmed support in areas 12223 and 12136.

It was also confirmed support in the 19920-15006 area. This is 11875-11950-12024, which halted the price fall after the US CPI data on the 13 October 2022. Losing it would mean new bearish pressures and a touch of the weekly support in the 11766 area; with extensions to 11650 and 11542 below it. The 11095 mark could be a target in case of a massive sell-off. These levels can be considered annual reversal points.

The Dax has reached our annual target in the 16800-17000 area. New resistance in the 16669-713 and 16735-759 areas. These areas could be easily beaten. Resistances in the 16829-893 area confirmed. 16927-972 is confirmed as weekly resistance.

If prices stabilize above 16927-972, we will aim for 17100 and then we will target the final extension of 2023 in the 17500 area. There is also the potential for new annual targets in the 18000-18500 area.

If by the following Friday, prices remain above 16643, we could witness a chance for a continuation of a bullish movement on a monthly basis; below 16418, the trend could move firmly downwards again.


US30 – Last week, the American index broke the weekly resistance at 37824-872, reaching new historical highs in the 37958 area.

The control area is 37914-861. The positioning of prices above or below this latter area could determine the weekly direction of the index.

New supports in the 37787 and 37715-452 areas. This broad range will withstand any bearish attempt, and only a powerful break will trigger new and substantial drawdowns.

Additional supports in the 37404, 37338 and 37303-186 area, which become weekly.

The loss of 37303-186 could lead to heavy sell-offs. Intermediate areas: 37126-034, 36927-850, 36762-657, 36617-498, 36465-342. The latter becomes monthly. All of these areas are excellent buying opportunities. Only the loss of the weekly support could open up for major corrections.

Confirmed 36094-36300, 36013-35872, 35813, 35717-570, 35459-370 and 35337-237. These are optimal levels to take into consideration for possible long re-entries in the event of a price correction.

Supports in the 35206, 35140, and 35052-34946 areas confirmed.

34880, 34833-796, and 34717-630 confirmed which is the critical volumetric support. The loss of these supports will be due to swift corrections at target 34383-210 and 34082-33929, which becomes the new monthly support.

Confirmed 33868-811, 33767-598, 33557-457 and 33384-192. Monthly support in area 33133-057. Additional supports in area 32896-792.

New monthly support in the 32771-650 area. Critical supports was confirmed in areas 32600-524 and 32393-331.

Confirmed supports are located in two overbought areas: 31197-497 and 31536-764. Additional support areas are placed at 31753-920, 32111, and 32276. The 31861 level still remains a key one.

31036-31125 is still to be considered critical support for the monthly level. It was confirmed 30953-815, 30715-614, 30559-381, 30253-136, and 29696-29906.

The 29485 mark remains a critical one. In addition to the 29619-529 and 29338-29264, the support zones 29159-28876 and 28800-28685 are again kept. These are all excellent supports to look for long entry opportunities from pullbacks. Should they all be pierced to the downside, prices could move toward 28319, 28051, 27765, and 27019 in extension.

At 35620, the gap of Tuesday 2 August will be filled. Final resistance in the 35673-715 area.

Prices reached and broke 37.000 points, posting new historical highs. New annual targets towards 40000-42000. Intermediate target at 38000-38500.

IMPORTANT NOTE: The market witnessed new peaks in volatility, however, it failed to start the expected corrective phase which is now just postponed. Therefore, it will be crucial to monitor whether the weekly supports are maintained to determine the possibility of a bullish continuation or not during this month. Prices have not yet provided any clues in this regard, and the breaking of the previous local highs could lead prices to new peaks before a more accurate reversal.

Also, this week, it is wise to note Monday’s openings and Friday’s closings for confirmation or denial of the current trend. Avoid overtrading and watch for volatility imparted by HFTs. Mark any gaps that may also appear during the week, with particular attention to those on Monday.

Enjoy your trading!

Latest Article
Improve your trading with a True ECN Broker
Trading account overview