Germany in focus, Dow, SPX 7-24-2012

 

Germany I think is the current bellwether of Global Equity direction. The recent rally near 6800 was a clear upper resistance of its short term uptrend channel, and an overbought Daily RSI, we expected a small 2-3% correction, but it made a huge 2daysell off amounting to 4.5% decline, its initial support is at 6400, and should NOT break below its uptrend line. An important support in 1-2weeks time.

Short Term: Uptrend but selloff trying its chance to sell below 6400 support.

Medium Term/Long Term: Sideways to downtrend, 3yr resistance pegs at 7000.

 

DOW Jones and SPX followed Europe’s decline, all three actually have the same chart and support in terms of %.

Upcoming announcement will make or break this global market:

1.       7/27/2012 – Q2 2012 US GDP

2.       Next week to Mid August 2012 are Europe-area GDP:

August 14,2012 - Germany GDP

August 7, 2012 - England GDP(tentative)

If numbers are frustrating, breakdown of this market is likely to happen. Else if numbers are good, we continue to climb back up to 7000 for Germany before critical things happen again.

DOW:

Short Term: Uptrend support at 12500-12600

Medium Term: Sideways
Long Term: Uptrend but weakening

SPX:

 Short Term: Uptrend support at 1348 then max support 1336

Medium Term: Sideways
Long Term: Uptrend but weakening

Both DOW and SPX must NOT break below its Short Term count. Else, Elliot Wave analysis and technical analyst/traders could trigger downward selling.