Photo - Andreas Zanin
Andreas Zanin
Analysis | November 30, 2021

DAX30 & DOW JONES: weekly analysis 29 NOV – 3 DEC

Market Movements

Last week ended on a slightly negative note for many equity indices in the wake of investor fears of further blockades in Europe.

Among the best performing assets of the week were coffee and the US dollar. Of note was the rally of the pound, which showed a strong weekly performance on the back of the inflation data published in recent days, the highest in 10 years. The euro, oil and Bitcoin fell.

Next week will be full of macroeconomic events concentrated mainly on Wednesday, as the following day is Thanksgiving Day in the US. Particular attention should be paid to the consumer price index, the core PCE index, as it is the main measure of inflation used by the Fed. On Wednesday evening, the minutes of the latest FOMC meeting will also be published, in order to understand the splits within the operating committee on monetary strategies. Finally, we highlight the IFO index in Germany, along with the US Q3 GDP reading. Friday is an important day for global consumer spending. It is Black Friday, the discount day that kicks off the Christmas sales season.

Analysis of the week and scenarios for the DAX and Dow Jones

This week the indices saw a correction, but to varying degrees. The S&P500 made a very slight retracement from the new all-time highs of 4,724 to 4,667, without touching the weekly support zone 4,618-4,586. Recall that the loss of 4,300 would represent a clear bearish signal. This week we maintain the scenario of the previous one, with a possible approach to 4,900 as prices could push upwards again.

The indices can maintain the upward trend until the next FED meeting in mid-December and aim for a 10% rise, unless there is a sudden change in sentiment and trend.  It is fair to say, however, that Friday’s close could see a retracement of at least 5%.

Monday’s opening could see a rebound, but also a possible negative close at the end of the day. Wall Street will be in mid-service for the Thanksgiving holiday, so Wednesday’s close will confirm whether or not the retracement will continue on many indices. However, as long as the S&P500 remains toned, declines will be short-lived. This is why caution is urged.

DE40 – The German index hit new all-time highs, reaching the 16,298 area in Friday’s session. The list advanced very slowly throughout the week, but at the end of the week we saw a reversal of just over 200 points. An important bearish signal.

16,076 has been confirmed as the key support: if prices do not recover first 16,204 and then 16,276, it is very likely to see further declines. The target of 16,500 is still possible.

To keep an eye on 16,014; if the price remains above 16,077 we could follow it advancing, vice versa it is possible to see an approach to the weekly support in the 15,974 area.

Intermediate support for purchases at 15,849 and 15,788-15,755 area, in case of bearish pressures.

Key support at 15,516-15,645 area; 15,516-15,463 area is a monthly support. Support at 15.363 area, along with 15,241, remains valid and useful for buying. Below the latter area, downward pressure may return with vigour.

The key support area 15,119-15,043 is also confirmed. The 15,000 point area remains the annual support. We always look at 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 14,600-14,441 area. Vice versa a rebound on these supports can start a process of reversal to the upside, as already happened last week.

If by next Friday prices remain above 15,974-15,889, we will see a continuation of the uptrend, but the behaviour of the price in the 16,000 points area will confirm whether or not we have reached the annual maximum. Below 15,241, however, the monthly trend could return to the downtrend.

US30 – The Dow Jones index suffered a heavy weekly drop (more than 800 points), as fears of new blockades in Europe to curb the spread of COVID-19 pushed investors to abandon banking, energy and hotel stocks such as airlines and hotels, and to invest in technology stocks (the Nasdaq closed very close to new all-time highs).

On Tuesday, the index touched the 36,293 area, and then retraced the rest of the week to the 35,599 area. The Dow closed with a very slight pullback.

If the price will be above 36,293, it is still possible to see an approach to 37000 points.

The weekly support is now in the 35,599-35,730 area. 35,511-35,404 is a relevant support area. Recovery of the 35,848 area may lead to some bullish pressure, but only a weekly close above 36,068 would ensure bullish relaxation. It is also necessary to see relevant volumes for confirmation of a new uptrend.

We monitor the support in the 34871 area, below which some bearish momentum may appear and can be reached if the price remains below 35,404. Loss of 34,372 area could open new bearish pressure.

34015 remains a key area on a monthly level. Confirmed support 33,980-33,725 to key support 33,608.

Next support at 33,215 and confirmed 32,956. The latter should be monitored as a loss there could lead to fast and new bearish pressures.

Buying supports at 32,761-32,638 and 32,308. 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: The Dow Jones decline is due to portfolio rotations. The Nasdaq remains strongly bullish and the S&P500 has remained very close to its new all-time highs. If the indices do not have unequivocal pressure, these declines are simply corrections. It is therefore necessary to choose carefully which index to buy and which one to sell, depending on the pressure offered by investors. However, supports and volatility must be watched continuously, as the trend can see strong upward reversals or strong downward accelerations.

 

Research provided by Giancarlo Prisco

The given data provided contains additional information, forecasts, analysis and market reviews published on the Key to Markets website.

Before making any investment decisions, you should know that:

– Key to Markets publishes analysis of any kind solely for information purposes and such analysis should not be construed as investment advice or a solicitation to buy or sell any financial instruments including without limitation CFDs.

– Key to Markets will not be liable for any loss or damage, which may arise, directly or indirectly from use of or reliance on the data provided by Key to Markets.

– Whilst all reasonable efforts are made to ensure that all content sources are reliable and that all information is presented, as far as possible, in a comprehensible, timely, accurate and complete manner, Key to Markets does not guarantee the accuracy or completeness of any information contained in the analysis.

– Past performance is not a guarantee of future results.

Before making any investment decisions you should understand how leveraged products work as they are speculative in nature and may result in profit and losses. Please, before starting to trade, you should make sure that you understand all the risk.

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