Stock Indices Give Back Gains Ahead of Fed Chair Speech​​​

Article by IG Senior Market Analyst Axel Rudolph

FTSE 100, DAX 40, S&P 500 Analysis and Charts

​​​FTSE 100 on track for the first week of gains in a month

​The FTSE 100 is on track to end the week up for the first time in a month as UK GfK consumer confidence came in at a better-than-expected -25 in August compared to -30 in the previous month. ​While Thursday’s low at 7,310 underpins, Thursday’s high at 7,385 may be revisited. If overcome, the May, June, and early August lows at 7,401 to 7,437 would be in focus. Further up the mid-July high can be made out at 7,481, the one-month resistance line at 7,490, and the 55-day simple moving average (SMA) at 7,495.

​Minor support below 7,310 can be found between Monday and Wednesday’s lows at 7,262 to 7,251 and major support in the 7,228 to 7,204 region. It consists of the March, July, and current August lows.

FTSE 100 Daily Price Chart

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​DAX 40 gives back this week’s entire gains

​The DAX 40’s swift reversal lower on Thursday negated all of this week’s gains as traders took money off the table following strong Nvidia earnings. They did so ahead of Jerome Powell’s speech at Jackson Hole today in which he is expected to reiterate the Federal Reserve’s (Fed) hawkish stance. ​Were he to do so, the DAX could slip back to its July and current August lows at 15,469 to 15,455 with the 200-day simple moving average (SMA) at 15,439 representing a possible downside target.

​Minor resistance above the 16,625 to 15,659 early and late May lows can be spotted at the 8 August low at 15,704.

DAX 40 Daily Chart

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​S&P 500 remains in a medium-term bearish trend

​Thursday’s Bearish Engulfing pattern on the S&P 500 does not bode well for the bulls as it points to a retest of the June and mid-August lows at 4,337 to 4,328 were Thursday’s low at 4,369 to give way. ​This may well happen if Fed Chair Jerome Powell’s speech at the Jackson Hole symposium were to allude to a “higher rates for longer” scenario.

​Thursday’s high at 4,474 would need to be exceeded for the S&P 500 to form a bottom. At present such a bullish reversal looks unlikely to take place this week.

S&P 500 Daily Chart