Every year, around this time, the speculations about whether or not there will be a Year-End Rally start.
Although it is hard to write about a Year-End Rally a day after yesterday’s carnage in the markets, I do see interesting levels that can give some hope for those of you who are looking for buying opportunities.
If there will be a Year-End Rally this year it should start now…
It should start from the Price Zones I’ll detail below…
Otherwise, we can get long-term reversal signals that will probably mark the end of the Bull Market.
In focus this week:
- Draghi and the ECB’s press conference
- The U.S GDP
If the Fed doesn’t do anything to save the markets these days, Draghi can step up and make the change.
The European Stocks are in much worse condition than those in the U.S (as I covered in my previous newsletters).
On top of that, Deutsche Bank has dived to new All Time Lows yesterday and I can’t imagine that the Euro Zone can afford a situation in which one of the largest banks in Germany will go bankrupt.
Will that force Draghi to take action?
We will get our first clue today…
S&P500 – Monthly support
S&P500 continues to generate bearish signs.
- It broke below the 200 days MA line
- It is now below the 50 weeks MA line
- Sellers are selling the highs and generating lower lows
Instead of Buy The Dip, the current trend is Sell The Rip.
The sentiment is clearly bearish these days.
The weekly chart shows that SPX recently broke below a weekly uptrend line.
2750-2760 is the nearest weekly level to focus on.
SPX has to climb back up above this Price Zone in order to generate a bullish signal following a sequence of bearish ones.
This can also be a Sell Zone for those who join the current bearish trend.
As you can see, the downside potential is quite significant – If SPX will fail to close back up above 2750-2760, it can slide all the way down to 2500 to test the 200 weeks MA line and a monthly uptrend line.
The Bulls hope is found in the monthly chart:
The Fast MA line (Yellow) in the monthly chart is a potential support line (you can clearly see it in the chart).
SPX must hold above it in order to keep some hope for a Year-End rally.
Make sure you are monitoring this line – It can create some opportunities for you (bullish…and bearish)
GER30 – Testing critical support
The German DAX continues to generate lower highs and lower lows in its weekly chart.
The Bears are now trying to push the DAX below its 200 weeks MA line – A line that has provided support since the 2010 Euro Zone crisis:
To be saved, the German Index must close above the 200 weeks MA line this week (or maybe even next week).
Also here, the monthly chart provides some hope:
The price is testing the 50 months SMA line – It should provide support.
To save the DAX from generating a longer-term bearish signal, Draghi will have to boost the European markets today in a way that the DAX’s price will stay above the monthly MA line until the end of this month (the monthly close)
UK100 – 200 weeks MA line in focus
Jus like the DAX, the British Index is also near its 200 weeks MA line:
For the last couple of week, the Bulls were able to hold the price above this critical line.
Now it is being tested again.
The 7000 handle is in focus.
Also here the monthly chart provides support – The 50 months MA line.
A close back up above 7000 will hold the price above the 50 months MA support line and also will drive the price back up above the 200 weeks SMA line.
That can be the signal that the Bulls will wait for in order to storm back into the markets and try to get their Year-End Rally.
USDJPY – Trading Channel in focus
The JPY is known for a safe haven during stock markets meltdowns.
We do not see a strong sell-off in USDJPY yet…
USDJPY’s price is trading near the bottom of a daily channel.
For now, it is holding above support:
- The bottom of the channel
- The 50 days MA line
If stocks will get a boost in the coming days, USDJPY will probably try to climb towards the top of the channel – Forex traders can use this scenario to gain some pips.
If USDJPY will break below support, that will probably come with some bearish moves in global stock markets that will mark the end of a 9 years Bull run.
Global Indices are being pressured by geopolitical tension.
The coming elections in the U.S, the Trade war with China and the Euro Zone, Brexit Talks, Italy… and more.
The Fed isn’t helping with its increased pace of rate hikes…
The markets are looking for a savior.
Will it be Draghi?
Will it be next month’s elections?
Time will tell.
Technically, the markets are near monthly support zones.
If we will see a rise in stocks, I think it will be limited.
But even a limited move can bring huge opportunities for us as traders.
The question is – Who will jump in first?
Maybe it’ll be the hotshots from Wall Street?
Now that all of 2018’s profit was wiped out, Investment Banks need to start buying again to show something for their yearly bonus.
Interesting times ahead…