Weekly market brief: 30 November

💡30 Nov - 4 December 2020

📈 FTSE 100: 6,550.23 (+ 3.26%)

📈 DAX: 13,298.96 (+ 0.09%)

📈 S&P 500: 3,699.12 (+1.87%)

📈 Nasdaq 100: 12,528.48 (+ 1.93%)

📈 Dow Jones: 30,218.26 ( +1.64%)

FTSE 100 (#UKX)

The FTSE 100 started the week, as expected, to the downside touching the 6,263 level to after jumping to levels only seen in March 2020.

As a consequence, this makes the 6,260 level a very strong area of resistance. We can link the strong rebound to the upside to the “golden cross” that took place on the Index: the golden cross (50MA over 200MA) is always considered a strong bullish signal.

For the near future, we might see nervous moves in either directions linked to the Brexit scenarios and the effect it will have on the British Pound: a strong Sterling would act as a negative catalyst to the index, while a weak Sterling might bring the FTSE at least to the 6,600 level (61.8% Fibonacci level).

From a technical perspective, however we want to stress how over extended the whole situation is: there is a strong divergence between RSI and Price which most of the time leads to strong pullbacks.

As of today, we see resistance at 6,606 and support at 6,462: if the index will approach on strong volumes either one of the two, we might see continuation to the upside or the downside.

From a technical perspective, move to the downside might be more probable.

DAX (#DAX)

The German DAX didn’t really move much over the week, it has been floating around the upper end of the channel since the beginning of November 2020 and touched again the high of 3rd September 2020.

From a technical perspective, the sideway movement brings the moving averages higher strengthening the areas of support. However, the MACD is slowly curving down leading us to think that a breath to the downside might be reasonable.

For the near future, we still expect a re-test of the 13,000 level before considering future moves in either direction.

S&P 500 (#SPX)

The #SPX after closing last week with a dojy candle, touched the 9MA and exploded back to all time market high.

Vaccine news, US Treasury Secretary, Stimulus talks are all news that keep pushing the #SPX higher every time is trying to pull back.

At the same time, to give an indication of how fragile the whole situation is, we shall see at what happened on Thursday 3rd when Pfizer announced a scaled back production for Covid 19 vaccine: on the news all the indexes turned red in a blink of an eye.

However, from a technical perspective, the SPX closed with a strong bullish candle on Friday leading us to think that on Monday the index could keep going higher together with a MACD that still signalling positive momentum.

What is giving us great cause of concern is definitely the very strong divergence between RSI and Price: this generally bring to the market very strong pullbacks.

For the near future we see

first resistance at 3,700

second resistance at 3,800

first support at 3,637

second support at 3,582

We might expect a re-test of the support at 3,637: if the channel will be broken, further downsides will be possible.

NASDAQ 100 (#NDX)

The Nasdaq successfully broken above the ascending triangle and ended the week with a hammer candle which may indicate continuation of the uptrend.

From a technical perspective however we want to highlight the divergence is taking place between RSI and Price between Friday’s closure and 2nd September level: the divergence is not as strong as in other American indexes, but might still signalling a possible pullback in the near future.

The MACD, however in bullish context, is showing sign of weakness and slight moves to the downside are possible.

One resistance is broken, becomes support: therefore, we expect for the near future a re-test of the 12,255 level before considering moves in either direction.

Dow Jones (#DJI)

The #DJI on Monday retest the lower end of the channel to then moved, like the #SPX, to all time market high.

The Dow closed Friday with a very strong bullish candle, adding to the table the chance that a slight move to the upside will still be possible for the coming week.

From a technical perspective, we see a MACD that is weak and almost approaching a downside. Together with a strong divergence between RSI and Price: such strong combination of divergence and weak momentum make us think that, again, a pullback is possible.

For the near future, the support and resistance level are as follow:

first resistance at 30,225

second resistance at 30,800

first support at 29,880

second support at 29,200

If the lower end of the channel will be broken, further downside will indeed be possible.