Markets Are Expecting a Jittery Week Ahead Due to Fed’s Monetary
Dow Jones and Standard &Poor’s stock indexes fell 0.23% and 0.57% respectively last week. So, we may say that the decline in the markets was insignificant. However, if we look at the global picture considering weekly charts, then we might feel a radiated danger. Technically, on weekly charts we may see valuable signals for a possible overthrow that could materialise into market collapse this week .
Over the past two weeks, Dow Jones did not manage to enter a long-term upward trend that started in October 2020. We may see a clear divergence of RSI and MACD indicators between May and August highs on weekly charts. Even conservative estimates suggest a correction by minimum 3.5-4% to 33,350 points.
The S&P 500 broad market index, however, finished last week at the support level of the similar upward trend. If it falls out of the multi-month support level, then it may drop to 4170-4250 points. This scenario might be activated as the index falls down below 4415-4420 points, as this zone is also crossed by the transitional support line of the upward trend from May 12, 2021. We may also see on the daily charts the highs reached in July through to the beginning of September, where highs were also convoyed by divergences.
When so many signals are accumulated in one place, a sharp drop usually takes place. Anything may become a catalyst for this. However, the major candidate for this catalyst is the Federal Reserve’s (Fed) meeting that will run on September 21-22. Investors may not expect an announcement to do with the bond purchasing program tapering, but they would certainly concentrate on monetary policymaker economic forecasts and interest rates dot plot projections.
Moreover, I expect that even high crude prices or hurricane season in the United States would not support markets.
As for the European markets, they are also in danger as the major DAX stock index finished last week below the support line of the upward trend that has been running since March, 2020. Such a closing bodes no good for the market as this week is more uncertain for European investors amid elections for the new Chancellor in Germany this Sunday. Neither political party is the favorite in the election race so far. Even political experts are cautious when projecting election results. So every voice will count. According to the election legislation in Germany, the winning party in Bundestag would assign its Chancellor. Current polls show that Social Democrat Olaf Sholtz, who serves as the finance minister of Germany, is seen as the most promising candidate for the position of Chancellor. Such a perspective is shared by 41% of Germans, while 27% of them support Annalena Baerbock from the Greens and 25% - Christian Democratic Union party candidate Armin Laschet. Final debates with all six running candidates for the position of German Chancellor will take place on September 23.
Back to the technical picture of the DAX index, I can suggest it may drop to 14800-148340 points.
Over the past two weeks, Dow Jones did not manage to enter a long-term upward trend that started in October 2020. We may see a clear divergence of RSI and MACD indicators between May and August highs on weekly charts. Even conservative estimates suggest a correction by minimum 3.5-4% to 33,350 points.
The S&P 500 broad market index, however, finished last week at the support level of the similar upward trend. If it falls out of the multi-month support level, then it may drop to 4170-4250 points. This scenario might be activated as the index falls down below 4415-4420 points, as this zone is also crossed by the transitional support line of the upward trend from May 12, 2021. We may also see on the daily charts the highs reached in July through to the beginning of September, where highs were also convoyed by divergences.
When so many signals are accumulated in one place, a sharp drop usually takes place. Anything may become a catalyst for this. However, the major candidate for this catalyst is the Federal Reserve’s (Fed) meeting that will run on September 21-22. Investors may not expect an announcement to do with the bond purchasing program tapering, but they would certainly concentrate on monetary policymaker economic forecasts and interest rates dot plot projections.
Moreover, I expect that even high crude prices or hurricane season in the United States would not support markets.
As for the European markets, they are also in danger as the major DAX stock index finished last week below the support line of the upward trend that has been running since March, 2020. Such a closing bodes no good for the market as this week is more uncertain for European investors amid elections for the new Chancellor in Germany this Sunday. Neither political party is the favorite in the election race so far. Even political experts are cautious when projecting election results. So every voice will count. According to the election legislation in Germany, the winning party in Bundestag would assign its Chancellor. Current polls show that Social Democrat Olaf Sholtz, who serves as the finance minister of Germany, is seen as the most promising candidate for the position of Chancellor. Such a perspective is shared by 41% of Germans, while 27% of them support Annalena Baerbock from the Greens and 25% - Christian Democratic Union party candidate Armin Laschet. Final debates with all six running candidates for the position of German Chancellor will take place on September 23.
Back to the technical picture of the DAX index, I can suggest it may drop to 14800-148340 points.
