Summary:
- European stocks on the rise this morning
- US30 closed lower the past 4 sessions but remains near all-time high
- US100 lagging but remains in an uptrend
There’s been a distinct bullish feel to this morning’s session with the DE30 breaking higher to trade at its highest level since the middle of July. Since the French elections back in April there has been a global rally in stocks with the accompanying rise in the EURUSD seeing US indices relatively outperform there European counterparts. As attention turns to the US session, now is a good time to look at two US indices that currently trade at interesting levels; The US30 and US100.
The US30 remains in a rising trend channel going back to April. Source: xStation
The US30 (Dow futures underlying) have enjoyed a strong run higher over the past 12 months with the market currently sitting on gains in excess of 25% compared to this time last year. However, there have been a series of lower closes of late with the last 4 candles printed being red. The pullback from the all-time high of 22386 has been relatively shallow in its nature and the longer term bullish channel since April remains firmly in tact. A break above 22386 would open up the possibility of further gains with the upper bound of the channel currently around 22600. Alternatively a break below 22070 could present bears with an opportunity to test the rising trendline from below and it is not until this is broken that a substantial decline may occur.
The US100 remains in a longer term uptrend but the recent price action has been somewhat weaker than that in the US30. Source: xStation
Turning our attention to the US100 the outlook is less positive for bulls with a possible double top at 6019 now a key resistance level to watch. There is still much to suggest that the market remains in an uptrend but the price action of late has been not as strong as that seen in the US30. 5850 is the first level to look to for possible support if we do get some weakness with this swing level now not far from a rising trendline (yellow line) from April. The trendline itself isn’t the best as it has only been tested on one occasion since April and there is a case to be made that a more recent trendline (purple line) was broken below on Monday. Price is now retesting this trendline from below and a move back above it would be a clear positive development.