FTSE 100, DAX 40, and S&P 500 Analysis and Charts

FTSE 100 continues to grind higher

The FTSE 100’s swift advance on Friday amid rallying luxury good stocks and general risk-on sentiment has slowed but the index remains bid ahead of Thursday’s Bank of England (BoE) monetary policy meeting. A rise above Tuesday’s 7,685 high would engage the 11 January high at 7,694 and also the mid-October high at 7,702.

Minor support below Friday’s high and Tuesday’s low at 7,653 to 7,642 can be found around the 12 December 7,609 high and at the 16 January 7,587 high.

FTSE 100 Daily Chart

Retail trader data shows 42.07% of traders are net-long with the ratio of traders short to long at 1.38 to 1. The number of traders net-long is 4.75% lower than yesterday and 44.41% lower than last week, while the number of traders net-short is 6.87% higher than yesterday and 88.37% higher than last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests FTSE 100 prices may continue to rise.

DAX 40 trades marginally below a new record high

The DAX 40 index’s mid-January advance has taken it above its December record high at 17,003 to a new record high at 17,016 on Tuesday despite the Eurozone reporting zero GDP growth in the fourth quarter, narrowly avoiding a recession, and the IMF lowering Germany’s 2024 growth forecast from 0.9% to 0.5%.

A weaker open on Wednesday and possible slip through Tuesday’s low at 16,913 would put Monday’s low at 16,860 back on the map which could indicate the beginning of a corrective move lower taking shape. Resistance above the breached January uptrend line at 16,976 sits in the 17,003 to 17,016 region.

DAX 40 Daily Chart

S&P 500 consolidates below record highs ahead of Fed decision

The S&P 500 is seen coming off this week’s new record high at 4,931 as investors cash in profits ahead of today’s US Federal Reserve (Fed) meeting and as last night Alphabet, Microsoft, and AMD dragged the index lower despite decent results but a poor outlook for the latter.

A slip through Tuesday’s 4,899 low would engage last Tuesday’s high and Monday’s low at 4,885 to 4,878. Strong resistance sits at this week’s record high at 4,931.

S&P 500 Daily Chart

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