Market movers
Last week closed with a strong rise in the stock markets thanks to the positive macro data, to the inflation data (apparently) under control and to the brilliant start of the American quarterly report season (financial sector well above expectations). There are many assets with the best weekly performances; in particular WTI Oil and the British pound. Bitcoin is back above 60 thousand dollars, a 6 months high, with the possibility of new all-time highs already next week (the approval of an ETF on crypto has helped a lot). Recall that the purchases were triggered thanks to the control of the yield curve of U.S. bonds, which in an inflationary context lead to more purchases on equities.
Next week will be full of macroeconomic data. The most important will be the inflation report in Europe. Attention will also be paid to the preliminary estimates of the PMI indices. On Monday China will publish a number of data, including the quarterly GDP. From a corporate point of view the most awaited quarterly reports are those of Tesla, Netflix and Intel.
Analysis of the week and scenarios for DAX and Dow Jones
The cyclical window of October, led to a powerful rebound. The S&P500 index has vigorously recovered the 4,400 area and is now aiming at 4,485, the level from which we can see a new upward trend begin, aiming also at new all-time highs. The 4,280 area of support held well, so the reaction of the last week is a clear bullish signal, unless there is a sudden reversal of the trend and sentiment. The loss of 4,300 would be a clear bearish signal. The indices can point to a 10% uptrend at this point.
The week should start with a sideways phase, with downward thrusts, and then leave room for further bounces until Friday’s close.
DE40 – The German index saw a sharp V-reversal on October 6, leading to a continuous upward push this week until closing Friday in the 15,600 point area. Purchases have been marked on each session, creating a series of new supports useful to re-enter in case of pullback.
Area 15,516-15,645, remains the area to break to the upside. From here we have as a target the key resistance 15,755. A recovery of this last level offers the possibility of price acceleration up to the area 15,855-15,910, where the weekly resistance is. Pay attention to these levels because the price can reverse at any time. Above 15,975 we will have the possibility of new historical highs. Here it will be necessary to verify the strength of the rise, otherwise we could see new declines. Above 15,975 we have a target of 16,014 and then 16,200, in extension 16,500.
Supports in area 15,363 and 15,241 useful for purchases. Below this last area the downward pressure can return with vigor. Confirmed the key support area 15,119-15,043. The zone of 15,000 points remains the annual support. We always watch the volumetric supports 15,017-14,981 and 14,842-14,804. The loss of these last two areas opens to new lows, with the first target in the area 14,600-14,441. Vice versa a rebound on these supports can start a process of reversal to the upside, as already happened last week.
To conclude, if by next friday the prices will remain above 15,645, the door for a new uptrend is opened. Below 15,241, on the other hand, the weekly trend can turn downwards again.
US30 – The beginning of the quarterly reports and the return of purchases on the stock markets led to a powerful rebound of the Dow Jones index.
At the beginning of October, the index established a support in the 34,015 area. After a long accumulation, the break-down of 34,768 last week led to a powerful rebound until Friday’s close, taking the prices over the key level 35,182. If price stays above that level, the door to 35,513 opens. From here break of the highs and straight towards 36,000 points, that is new all-time highs.
The price needs to maintain 35,197 in order to continue its bullish run. We monitor the support in the area 34,871, under which some bearish momentum might appear. However, the uptrend is strong; only the loss of 34,372 can open new bearish pressures.
The 34,015 remains a key area on the monthly level. Confirmed the support 33,980-33,725 until the key support 33,608.
Next support at 33,215 and confirmed 32,956. The latter should be monitored as its loss could lead to fast and new bearish pressures.
Supports at 32,761-32,638 and 32,308 are good entry points for puchases. The strong buying zone created weeks ago at 32,308-32,137 is confirmed. Only below it we can see stronger bearish pressures, with possible structural trend changes.
IMPORTANT NOTE: Despite the fact that inflation data shows a tendency to higher and higher values, investors have opted for buying stocks, thanks to the quarterly reports. We do not know with certainty if this rise will be long-lasting; however, it is good to follow the trend. It is necessary to continuously watch the supports and the volatility, as the trend can see strong reversals to the upside or strong accelerations to the downside.
Friday’s bullish turn should be closely monitored, especially on Monday’s opening. If last week’s supports are held, we can continue to look for buying opportunities.
Also this week it is wise to note Monday’s openings and Friday’s closings, in order to confirm or deny the current trend. Avoid overtrading and keep an eye on the volatility impressed by HFT. Mark any gaps that may appear during the week, with particular attention to those of Monday.
Good trading!
Research provided by Giancarlo Prisco
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