Article / 05 July 2017 at 12:12 GMT

Equity indices sending mixed signals

Technical Analyst / FuturesTechs
United Kingdom
  • Dow futures keep reaching new highs, with a fresh all-time high on Monday
  • The Nasdaq futures chart tells a very different story from the Dow chart
  • Nasdaq futures chart suggests we're in "retrace mode" at least in the short term
  • The tone in Europe has been weaker recently, as seen in the Dax and FTSE futures
Traders and financial screens
 The Dow and Nasdaq futures charts are telling quite a different story. Photo: Shutterstock


By Clive Lambert

On Monday the Dow futures (Sep '17) hit 21,508 points, a new all-time high, and not far away from a long-held target we've had at 21,548. Last week brought a selloff to 21,138, but the bulls once again "came to the rescue" just when it looked like a retracement might begin.

Dow futures - daily

Dow Daily






















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Source: CQG Inc

The S&P 500 is arguably a better benchmark for US equities than the Dow, and it did not quite regain its recent high on Monday, getting up to 2,436.50 points before selling off into the close. The all-time high for that one is 2,451.50 on June 19.

S&P500 futures - daily

S&P 500

Source: CQG Inc


But a look at the Nasdaq chart tells a very different story, as the (all-time) high on this one was back on June 9, at 5,907.50 points, and since then it has fallen to 5,560.25 (in today's overnight session), putting in a lower high and a lower low since it reached that high in June. This is quite a different story from the Dow chart. It suggests that we're in "retrace mode" at the very least in the short term, and I have some targets for this sort of move at 5,454 then 5,392 points.

Nasdaq futures - daily

NASDAQ Daily
Source: CQG Inc
 
The tone in Europe has been weaker recently, with the Dax future selling off from its 12,948.5 high on June 20, a day when a "dark cloud cover" reversal candle was posted. There is a big gap below, created when news emerged that centrist politician Emmanuel Macron was looking set to become France's next president back in April, and I've been suggesting to my clients that this gap will be filled. This needs a 12,114.5 print. Last week's low was 12,303, so there's still some way to go, but we're nicely on the way.

Dax futures - daily

DAX Futures Daily
Source: CQG Inc
 
The FTSE (future, Sep '17) is also setting a weaker tone, and I suggested a sell last week that has done decently so far, hitting one target as I write. This was on the back of a "dark cloud cover" formation, which is often a reliable reversal indicator at highs in the FTSE.

The "Macron gap" is visible on this chart too, down at 7,078.5, so there's another downside target to consider. 

FTSE futures - daily
FTSE Futures Daily
Source: CQG Inc


— Edited by John Acher

Clive Lambert is chief technical analyst at FuturesTechs 

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