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DAX and SPX Weekly Analyses, Nov 24, 2019

First down week on DAX and SPX after six consecutive up weeks. Primary focus for markets is US-China trade war information. On some negative news - we got liquidation breaks, BUT with no follow-through. So, no sellers for now, just a question of how much this situation can last, and we can see examples from before, where market was strong but not going anywhere for WEEKS, and then we got a correction.

In the week ahead:

German Ifo Business Climate will be most important scheduled data for Monday, US CB Consumer Confidence for Tuesday, US Prelim GDP q/q for Wednesday, German Prelim CPI m/m for Thursday. Thanksgiving is on Thursday, US market closed and Friday session shortened, so lower liquidity is to be expected in European markets, both on Thursday and Friday. Last DAX component to report Q3 Earnings, E.ON SE, will do so on Friday, Nov 29th.

Just four more weeks to the end of the year. Soon we will see headlines about Santa Rally, and will it be ON this year or not.

Chart #1 - ES_F Daily

Like was written in last week analyses, 3130 was resistance. This got tagged and we had a pullback - easy setup there. Bulls have the upper hand, as long as they hold price above previous ATH. While SPX and NDX was leading to the upside, RUT remained in the range.

Chart #2 - RUT Daily and zoom on a weekly

Range 1450-1600 is still intact, and small cap index now coiling for a THREE WEEKS in a bull flag below 1600. Both break and fail can ignite good move. Breakout would be a help for SPX bullish scenario.

Chart #3 - DAX CFD 240 min chart

This is one of my usual DAX charts for ranges, channels and levels. "Look above and fail" and then no follow through. Usual target is bottom edge of the range - and we got that, but then we also got "look below and fail". And here we are, back in the range. Always combine futures (or CFD) charts with cash index charts - since RTH session is more important.

Chart #4 - DAX Cash Index chart Daily and zoom on a Weekly

Bodies of last three daily candles are below 13,200. That level represents May/June 2018 swing highs on DAX, and next swing high above that is ATH. Market made some new levels and zones in the 13,200-600 area, that we are using now. We also got a new yearly high at 13,380. On a zoomed part, we can observe area 12,960-13,020 that would be logical support, and market went to 13,040 last week.

There could be a swift washout move toward 13,000 / 12,960 levels, or slightly below that, and buyers would probably react there, buying such a dip.

Conclusion about both markets:

Market is very resilient, every dip was bought. We got no follow through on moves that should get it, like that move on Friday on DAX. Up move was totally negated by the down move, and yet sideways was the only PA later. As a short term trader, I find these prices here and now, good only for daytrading. Personally, I need clearer situation for swing trading. Decisive breakout or breakdown, test of LTF zone to initiate a swing position.

This image of a strong market can last for a long time - observe it on Chart #1. Not doing much for a prolonged period of time can be a continuation pattern, OR a warning sign, that reversal or correction is coming. Like we had on DAX, when in October market "repaired" all of that poor structure full of gaps, that was made in September. Ten up days were negated in three days. That is to keep in mind, but so far, market is bullish, strong, picking up every dip, and sellers had multiple chances to move markets lower, and nothing happened. As was written before - a 100 point drop on SPX would not do any harm on LTF bullish trend, and same goes for DAX, for a pullback to any of the LTF S levels, not only to 13,000 but down to 12,500. So for now, going day by day, zone by zone, trying to take pieces of the moves between two reference points - no reason to change the method that gives results.

Cheers, StrayDog


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