Perhaps I will start by explaining a little more why I'm posting these 20/50 dma charts. Technical analysis can be as simple or as difficult as you want to make it. This is very simple and just gives a useful general indication of the current market trend. It shouldn't be used by itself to make trades, but it gives a good picture to start with as to what the markets are doing. You will also find that it is often the case that when these 20/50 crossovers happen, up or down, the move is often good for several weeks or a few months in that direction once confirmed. Doesn't always work out that way, a quick reverse can happen, but we are looking for the direction of the trend, positive or negative.
For now, the 20/50 dma is still looking positive despite the down days towards the end of last week. Looks to be at a critical will it, won't it, cross for the US indices, while the UK and Eurostoxx is slightly ahead of the game. The fact that there was no big sell off in the UK towards the end of last week and that these moving averages are holding for now suggests that the market wants to go higher. Still everything to play for, especially if the US pulls back at this time and the crossover doesn't happen we could see a reverse. The UK and Europe would mirror any big fall in the US.
Interesting that we are also getting close to some big round numbers, 13,000 on the Dow, while 5700 seems to be offering some resistance similar to 6000 did a while back on the FTSE100. As of writing the FTSE is within 30 of 5700, it will be interesting to see if it can break through and stay above it this time. For that to happen with any conviction the 50 dma will need to start trending up. Right now it is still flat.
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| FTSE100 |
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| FTSE250 |
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| Eurostoxx 50 |
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| Dow |
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| S&P 500 |
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