Index analysis, DAX, FESX, S&P500 and Nasdaq

Today I´m going to talk about some of the biggest indexes around the world. The year to date performance is really good in all of them. We have seen an improvement in the economic data which always help the stock market and brings confidence to the consumers. If you understand the movement of the stock market, you can guess what’s going on around the world, sadly, you need the experience to do it. Let’s say that I consider the stock market as it was a leading indicator of the economy. Other examples of leading indicators are the bond yields, the interest rate yield curve, new housing starts and money supply. Apart from them, the rest of the economic indicators are based on the last month or the last period of time.

For example, when the market participants expect positive data and the economic indicator is negative, there is a big movement in the market.

Let´s see how the indexes are performing this year:

DAX

    Source: TradingView, Dax Index, daily

The Dax went up during the first six months of the year. After this period, and due to the big fines of the German automotive sector and the uncertainty of the German elections if fell to the 11900 level.  It’s been raising since September without stopping.  As you can see it tested two times the 200EMA but it couldn´t consolidate the downward movement.

   Source: TradingView, Dax Index, daily

This is the German index from July until now. As I said before it went down to the 3rd support (11941.5) where we can see a double support. The technical figure and the buying pressure helped the Dax to look for highs again. At the moment, it´s around 12900 and probably this movement will continue in the short term.

Eurostoxx (FESX)

    Source: TradingView, FESX Index, daily

You can think that it´s the same chart as the section before with different scale. The shape is the same. I really like the FESX because there is a lot of liquidity. This index represent the 50 biggest companies in Europe. It respects the technical levels. The main difference with the Dax is that it has exposure to different countries in Europe. The peripherical countries in Europe don´t perform as well as the most conservative ones like Germany, and this fact is reflected on the EuroStoxx index. This is why there are more retracements than in the Dax or S&P500. 

    Source: TradingView, FESX Index, daily

This a stable contract full of liquidity as I said before. The shades highlighted in yellow are really important because they show of the buyers took control of the situation and reversed the downward move.  When the 20EMA crossed the 50EMA, this contract accelerated the move.

S&P500

   Source: TradingView, SP500 Index, daily

What can I say about the S&P500? It’s the best chart I´ve ever seen for a technical analysis book. It respects the trendline I drew on the chart. The moving averages don’t cross between then and this shows the strength of this bullish trend. The broken triangle pattern led the S&P500 to 2480, where it retraced to the trendline and rocketed to the current levels.

    Source: TradingView, SP500 Index, daily

This shows the last 4 months. You can see how technically this contract trades.

Nasdaq

    Source: TradingView, Nasdaq Index, daily

This is almost the same case as the S&P500. I’ve noticed that the buying strength is decreasing. If you see the red lines drawn by me, each rise is not as strong as the previous one. It means that maybe it’s consolidating or maybe the sellers will be back testing the 5900 or even the 5775 levels.

The main reasons for these strong performances are: improvement in the economies, the consumer confidence the change in the economic policy from the central banks When will this move stop? I'm not sure, but this move is supported in part by the central bank stimulus policies. I think the transition of these supportive economic policies will be a challenge and it can affect all the financial markets.The approval of the US tax reform can boost the US markets in the short term. I hope that this post helps you.

Have a good trading! 

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved