DAX and SPX Weekly Analyses, Nov 10, 2019

Fifth up week in a row for indices, which are now on the extended run higher. US indices posting new ATHs, and we got a breakout above 13,000 on DAX, something that was not done a week before. After that a break above 13,200 resistance level, and a test of that breakout on Friday. My take of setups that we had for day trading DAX in previous week is discussed in Weekly Review video.


In the week ahead:

Economic calendar > Tuesday - German ZEW Economic Sentiment; Wednesday - Fed Chair Powell will testify on the economy before the Joint Economic Committee, in Washington DC; Thursday - Chinese Industrial Production y/y, German Prelim GDP q/q, Fed Chair Powell will testify on the economy before the House Budget Committee, in Washington DC.


So we will have some important data and Powell will testify two days in the row, BUT the most important thing for markets which attention now is dominantly on US-China trade deal could be US President Trump speech in the Economic Club of New York on Tuesday. That carries potential for "Headline risk" and news driven moves.


German earnings are not over, and we will have six DAX 30 components reporting this week: On Tuesday, Nov 12 - Continental AG, Deutsche Post AG, Infineon and Linde

On Thursday, Nov 14 - Henkel AG and RWE AG

After this week only E.ON SE will be left to report. This company will report on Nov 29th.


Chart #1 - ES_F Daily


Green arrows represent tests of resistance. First test of the prev. ATH and first test of the upsloping trendline held the price. That is why we trade FIRST test of reference levels. Second time we had a breakout. Can market make a parabolic advance now, like prior to that high, that was made in January 2018? Or will it be 4th time in a row for market to make false break of previous ATH (squares on chart)?

Difficult to predict, so as long buyers holding price above prev. ATH, they are in control here. We also must note that this market now, is a news driven market, and to "carry forward" all possible market generated information, like unfilled gaps, volume, divergence, ATR...


Chart #2 - DAX Daily


Important downside levels on German DAX: 13,000 / 12,800 / 12,660 / 12,500. As written last time, in previous Weekly Analyses, there is no good Resistance in the 13,200 - 13,600 (ATH) area. This is "fast" area, where market moved quickly lower, back in January 2018. So market can make new levels and zones here, and it is doing so. ATR on a notable drop on all indices.


Chart #3 - SPX and DAX Cash Index Daily, with unfilled gaps


Zoom on cash index charts

Up, range, up, range - a sequence of up trending markets, where every single pullback is bought. That is why it is important to keep track of unfilled gaps, and prior resistance levels / zones that are now supports, since we will have larger pullbacks in the future, and those reference points will help us, as targets on sell setups or as entry points on long setups. Same like we had in the past. Even 800 point down move on DAX now, would go "just" to 12,500 and IF that would be it, and another up leg would form from there - large up trend would still be intact.


Conclusion is the same like last week: Buyers need to hold current levels / push higher, and serious sellers can appear only on decisive breakdowns of inflection levels.


Cheers, StrayDog