We start the week with a little sign of weakness beginning to creep in on a number of indices. The 20dma is under pressure on the FTSE100, Eurostoxx and Dow and both the 20 and 50 dma look like they are leveling off slightly, although the general trend is still up. However, this is a simple analysis and given the delay in confirmation that one tends to get from a 20/50 dma crossover, it is important to be looking at other indicators, chart patterns, support and resistance for signs of strength or weakness in the price action. By the time any 20/50 dma crossover has happened to the downside, if and when it does happen, the chances are that the market will have been in a general downtrend for a few weeks before these dma's catch it.
In the meantime, the market still seems to be hoping for more news of stimulus, announcements of more action from the ECB and US Fed as September moves on. There is a big risk of disappointment if this doesn't happen and central banks and Government continue with their baby steps approach to putting together some sort of plan to contain any debt fallout, rather than a bazooka. I think it's clear that the markets would prefer a bazooka approach and deal with any negative outcome later.
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| FTSE100 |
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| TechMARK |
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| Eurostoxx 50 |
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| Dow |
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