Lakshmi Prasad S
By Fawad Razaqzada
Initial enthusiasm over the possibility of central banks taking a more accommodative stance faded, and results on many companies’ stock earnings calendar fell short of expectations.
For example, Burberry Group (OTCPK:BURBY) has experienced a significant decline of up to 9% in its shares due to lower demand for higher-end products, which potentially prevented the company from achieving its sales forecast. Can cause obstruction.
HelloFresh (OTCPK:HLFFF) also took a hit, with its shares falling nearly 20% after missing sales estimates. Additionally, Cisco Systems (CSCO) dropped 10% in premarket trading after reporting a slowdown in new product orders.
FTSE: Time to tackle global indices?
After hitting a new all-time high in February, the FTSE has struggled to find any lasting support, hurt by concerns over China, Britain’s struggling economy and higher interest rates around the world.
But this week we got some positive data from China, the UK and the US, which could mean the worst days are behind us. Indeed, the fact that UK inflation fell sharply to an annual pace of 4.6% from 6.7% previously provided some solace on Wednesday.
Although most of those gains have been lost, there are some technical signs that suggest the FTSE may be able to start pushing higher again amid fewer macro concerns.
Disappointingly for the bulls, the FTSE has been unable to enjoy the same rally that we have seen in other European and US stock markets over the past three weeks.
In this regard, the FTSE still has a lot to do. But in recent days, the FTSE has managed to climb above the 21-day exponential moving average and resistance at 7450ish.
Therefore, there are some signs of bullish momentum returning to UK markets. This 7450 level was being tested from above at the time of writing, which means bulls will appear here to lift the index higher in the second half of the day.
Even though the UK index has been making a series of lower highs throughout this year, for the most part, it has not really sold off, despite remaining in a broad consolidation range.
The index has managed to hold above the low of 7202 made in March, after several bearish attempts to take it below that level – twice in the summer and again in October.
The rapid resilience in the face of all-encompassing risks is quite impressive. If it is able to weather the storm with minor damage, the index may now start rising on any good news.
I believe there is a good chance that we may see a rally to test the 200-day average and prior resistance in the 7600-7620 area next.
DAX: Outperforming German index tests key resistance
Unlike the FTSE, the DAX is potentially very close to reaching its all-time high in July. What’s more, from its low point in October, the German index was up more than 8% compared to just 3% or more for the FTSE during the same period.
The DAX has been a better index for bullish trading, but that does not mean that the outperformance will continue. The German index has now reached a potential resistance zone around 15800 to 15850.
Here, the 61.8% Fibonacci retracement level from the all-time high meets the origin point of the previous breakdown zone.
Nevertheless, given the recent bullish momentum in global stock markets and the fact that several support levels have been broken, we may see only minor declines and consolidation rather than a sharp selloff, which suggests that the trend may turn bearish again. Has been.
Therefore, I would be more inclined towards buying on dips near support levels. The next major support area to watch is around 15575 to 15640. This area was previously resistant, and we have the 200-day moving average here.
US indices lead global stock markets on expectations of peak inflation and interest rates
We are now in mid-November and the US stock market is enjoying one of its best phases this year, all due to optimism that interest rates will begin to drop in the near future as inflation heads downwards.
However, after three weeks of a sharp rally, US markets appear to be a bit overbought, especially the tech-heavy Nasdaq, so there is a risk of short-term downside.
But with so many resistance levels broken in this recession, any potential short-term weakness should not be confused with a bearish reversal, unless the charts tell us otherwise and/or the Fed forcefully moves against expectations for a rate cut. Don’t start lifting. ,
The latest gains this week came in response to Wednesday’s data, which showed signs of easing inflation pressures as prices paid to U.S. producers unexpectedly fell in October by the most since April 2020. Is.
This followed a soft US CPI print a day earlier, which had triggered massive jitters in financial markets. A sharper-than-expected inflation decline in Britain also helped lift sentiment in Europe, as did signs that China’s recovery is beginning to take hold.
Meanwhile, slightly stronger-than-expected US retail sales and the Empire Manufacturing Index showed the world’s largest economy continued to defy expectations of a recession.
Originally published on MoneyShow.com
editor’s Note: The summary bullets for this article were selected by Seeking Alpha editors.