Fibonacci readings point stocks lower
- Dax below the 200-day simple moving average
- Late-Wednesday selloff leaves S&P 500 vulnerable
- S&P 500, Dow supported by 200-day SMA
But our old friend Mr. Fibonacci might be coming to our aid, and could be suggesting that fresh selling is around the corner.
DAX futures (daily):
- The recent recovery high is 12,529. This is just shy of the (38.2%) Fibonacci resistance at 12,548.
- We are below the 200-day simple moving average.
- The relative Strength Index has been flagging a potential top for a while, signalling big bearish divergence.
- Friday and Monday combined to form a "Dark Cloud Cover" candlestick reversal formation.
FTSE futures (weekly):
We dipped through this support level on the big selloff the other week but soon recovered. Now, however, we are failing to retake 7,266.
Again, the 200-day SMA is above and the momentum studies are showing divergence, signalling continued weakness.
S&P 500 futures (daily):
US indices have seen a bigger recovery rally than their European and UK counterparts but have now stalled at the 61.8% retracement of the selloff at 2,745. Wednesday's S&P 500 high was bang on this level, followed by a big selloff... the Dow chart (below) is similar, with the added confirmation of a powerful "Evening Doji Star" reversal pattern on the daily chart.
Dow futures (daily):