Another up week for indices, fourth in the row. German DAX was better performer in October, with 8.5% gain, versus SPX and +6.5%. SPX and NDX made new All Time highs, and SPX managed to close above the resistance trendline, entering a new, "uncharted territory". NDX is a leader in US.
In the week ahead: Economic calendar for next week is full with low impact news, and IMO only notable releases are: Monday - ECB President Lagarde Speaks, Tuesday - US ISM Non-Manufacturing PMI, Wednesday - EU Economic Forecasts.
Earnings are still on, but in US all market movers companies already reported. But, big earnings week in Germany, with 10 DAX components reporting, starting from Tuesday - Vonovia SE, Adidas, BMW, Wirecard AG, Deutsche Lufthansa AG, Deutsche Telekom AG, HeidelbergCement AG, Munich Re, Siemens AG and Allianz SE.
Chart #1 - SPX Cash Index Daily
As written above, SPX closed above resistance trendline. There are two unfilled gaps nearby, one almost filled and a new one from Oct 31st. Buyers need to hold price above previous ATH. Since we are now in new territory, that is most important technical level. Unfilled gaps stacking behind, low impact news and market looking for US-China trade related information. Market received three rate cuts, so now bulls need to prove themselves by holding the price above this inflection points. In the zoomed part of chart, we can observe how buyers made a gap and go breakout from 4-day range. That range was holding the price above previous ATH. They can continue now with such activity.
Chart #2 - NDX and RUT Daily
We can observe the same behaviour on NDX, which is currently the leader. Friday and breakout of a 4-day range. Previous ATH again most important inflection point. And finally RUT, which is in a ~1450-1600 range for a year. Imagine parabolic up move on SPX and NDX like we already had into the highs of January 2018, and RUT breaking this range. Catch Up move could be epic, and 100% expansion of a range would lead to ATH. Failure on bigger brothers - false breakouts there, and RUT again back to low end of the range or even lower.
So, nothing really new to say here, on US indices, that wasn't already said or written previous week.
Chart #3 - DAX Daily combo
Unlike US indices, we didn't get a DAX balance breakout on Friday. Gap at 13,010 is still unfilled, and price failed to tag 13k. When we combine these two charts, then we have a pretty clear picture of most important downside and upside levels on German Index. Buyers here are in firm control, as long as they hold the price above 12,800. That is our first line in the sand. Then we have 12,660 and 12,500. Look at those levels on Weekly chart for more clarity. Since there is not much of a resistance between 13,000 and 13,200 - market can make new levels here once and IF they break above 13k. Same situation is between 13,200 and ATH level.
Common thing on DAX, SPX and NDX was that dips was bought quickly, no matter how small, or how sharp and deep (news driven) they was. That is indication that all of those markets wants to go higher. Previous three times new ATHs on SPX was followed with false breaks and corrections. Buyers are in control, just note that false breaks of levels this important can take days, if not weeks, since we are looking at daily / weekly charts here. Take a look at Chart #4 from previous Weekly Analyses. So, buyers need to hold these levels and push higher, and serious sellers can appear only on decisive breakdowns of inflection levels.