Chart #1 - DAX Futures Weekly
Another strong week for German DAX. Markets got fresh round of stimulus from the ECB and now all eyes are on the FED, and Wednesday, Sep 18th, FOMC Statement. There is around 85% chance that Federal Fund Rate is going to be cut by 0.25%. FOMC Press Conference will give more insights what those "boneheads" (TM by US president) are planning to do.
Chart #2 - ES_F Daily
So, three days to the big event, and SPX could try to push to the trendline resistance, which is around 3040, and wait for the FOMC Statement there. We can expect sellers reaction at trendline and how will market react there will give us some tells of market strength. Will it be sharp rejection, shallow pullback, or no reaction at all? Possible overshoot and coming down. Only strong close above the trendline is bullish enough for making new ATHs.
Correlated indices lagging behind, as we can see on chart #3. NDX with the small lag, thanks to big tech names like AAPL that had a downgrade, and the rest of the FAANGs lagging. Sector rotation propped RUT again near 1600 resistance.
Chart #3 - SPX, NDX, RUT, Daily charts, period from last September
Both DAX and SPX now looking more bullish than their leading stocks. Check the SAP - biggest DAX component Daily chart from this tweet. SPX left a big unfiled gap after making a balance breakout, something shown in last Weekly analyses. DAX can continue upside into FOMC Statement, but it can also make a range, or a pullback. Anything is possible. It already made a a large up move, leaving five gaps unfilled.
Chart #4 - DAX Cash Index Daily
As we can see on Cash Index chart, five gaps are there down to the August range, and one from Aug 2018 is above the price. More of them are higher and lower, but the ones on the chart are now important. There is a hole around 12,300 and IMO - as long as buyers are holding the price above it. they are in short term control.
Chart #5 - FDAX Daily
Interesting crossroad of three trendlines, that all come around 12,500. Friday high was formed there. From Friday Sep 13th Morning notes: "False b/out above 12,475 could end near or at reference level 12,500 and turning back below the zone would confirm false breakout. Such a low odd scenario for today would target Main Support." This was low odd to happen on Friday, but can happen in next days, as we have three full days until FOMC statement. Main S was a zone near 12,300.
Chart #6 - DAX CFD 240 min
Area between 12,300 and 12,460 offered poor resistance, and market grinded its way through it. Same is between 12,460 and 12,600. From this chart and previous charts we can see swing highs and unfilled gaps up and down. Buyers were frontrunning ECB stimulus, and we got this up move with few shallow pullbacks, enough to retest broken areas. The steep angle of the move is however a warning sign, as it can't last forever. Likely a liquidation break is coming, or at least forming new trading range. Than, from this new trading range, another directional move could develop. That move than can either go above 12,660 or toward ~11,850 and fill all those gaps along the way.
Buyers having the upper hand for now, and VIX going steadily lower, but DAX and SPX are marching higher into the better areas of resistance. Last week classic buy-the-dip setups were giving results, and shorts from good locations was good just for reaction, not to "overstay" in them. Friday high on DAX and level around 12,500 will be important in next days, since together with 12,300 represents short term inflection points. Buyers are now aiming for 12,600 and 12,660 previous swings highs, along with the 12,676 unfilled gap.
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Cheers, StrayDog