DAX 40 & DOW JONES: weekly analysis 11th – 15th December

<h2>Market movers</h2>
<p>The major US stock indexes continue their upward lunge this week as well. The ADP payrolls, the JOLTS job openings, and the Challenger job cuts point to a slowing US labor market.</p>
<p>This stalemate continues to fuel a scenario for a more dovish Fed, which would lower US yields and the USD while stimulating demand for high-growth stocks.</p>
<p>While the market is increasingly confident that a hard landing for the US economy will be avoided, data shows that a US recession is still a solid probability.<br />
The economic calendar will deliver crucial macro data.<br />
Let&#8217;s start on Monday, 11 December, with the auctions of the US Treasury bonds.</p>
<p>On Tuesday, 12 December, it will be the turn of the ZEW economic sentiment index for Germany and the inflation data in the United States.</p>
<p>On Wednesday 13 December Japan will release manufacturing data followed by the UK GDP. Europe will release industrial production data while the United States will announce its PPI. The most anticipated news of the week will come from the Federal Reserve, which is expected to declare its rate decision on Wednesday and is expected to keep rates unchanged. The focus will be much more on guidance, with the market now pricing in a 60% probability that the Fed will cut rights as soon as March next year. However, the Fed is likely to be cautious and has previously warned that it is too early to discuss rate cuts. As a result, the market is trying to second-guess the Fed. Any dovish comments could support the view that the Federal cut early next year.</p>
<p>On Thursday 14 December, the BNS will declare its interest rate decision, as will the BoE and the ECB. The ECB, when it meets on Thursday, December 14th, is expected to leave interest rates at the record 4% level. ECB policymakers have said they believe that the ECB is done hiking interest rates as inflation has cooled to 2.4% and is almost at the central bank’s 2% target. The market will focus on when the ECB may start cutting rates. The market believes that the ECB could start cutting interest rates as soon as March next year and is looking to cut by almost 150 basis points throughout 2024. Any dovish guidance on the future path of rates could pull the USD lower.</p>
<p>In the UK the BoE meeting comes as inflation remains 2.5 times above the central bank’s target and as the service sector activity unexpectedly returned to growth. The Pound has been resilient as the market believes that the first cut from the BoE may not happen until June, which is later than the ECB and the Fed. Bank of England governor Andrew Bailey has said that he will do whatever’s necessary to get inflation back to the 2% target.</p>
<p>In the United States, retail sales data and initial jobless claims will be released.</p>
<p>On Friday 15 December China will release important data such as industrial production and retail sales. Chinese consumer and industrial activity expanded faster than expected in October; however, weak trade on a slowdown in the property sector acted as a headwind. Investors will be watching the data closely. However, the comparisons could be flattering as the comparison was with the final stages of China’s restrictive COVID policy last year.</p>
<p>Eurozone PMI data will be in focus now after the composite PMI rose to a 4-month high in November but remained in contraction territory. Another month of contraction would suggest that the eurozone economy tipped into recession in the final quarter of the year. However, an improving PMI could also suggest that any recession may be shallower than initially feared. Weak PMI figures could support the view that the ECB may need to cut interest rates sooner than expected, which could pull the Euro lower and underpin stocks.</p>
<p>On Friday in the US, we will have data on industrial production and the service sector.</p>
<p>To conclude the week, there will be the quarterly options technical expiration.</p>
<h2>Weekly analysis and market scenarios for DAX and Dow Jones</h2>
<p>The setup of 30 November managed to trigger new upward lunges. The swing that has risen, not only in the American markets but throughout the world, seems to open up the getaway to a multi-year bullish scenario.</p>
<p>What will happen from now on? Will the markets continue to rise till the end of the year? This remains our primary thesis, as seasonality, few drawdowns are expected until at least January 6th. Indeed, the month of December tends to post lows in the first week and highs in the last week and on average tend to be positive.</p>
<p>From the lows of the week of March 13, the rise of the international stock exchanges has been incredible. The thesis that supported a lead to a very strong climb until August 4th, the annual setup, was confirmed with almost millimeter precision. Everything occurred as we predicted, and between September 2022 and March 2023, all international markets posted their temporary lows (which could also be the ten-year lows).</p>
<p>Beyond the rhetoric of the debt ceiling, the recession, and the banking crisis, only a decisive flip in sentiment could lead to a trend reversal. Earnings of US mega caps have shown off and many other companies are also ramping up the increase in revenue.</p>
<p>The average annual returns on international equities (World Stock Exchanges based on GDP) are around 11%. Current rates in America are more than 5%. With a projection for 10, 15, and 20 years, equity markets always beat bond markets. Therefore, we should be at the starting point of a 10-year bull market.</p>
<p>Rising interest rates won’t directly and inevitably lead to a recession. As long as these hikes are balanced with economic growth, there should be no danger. On the other hand, an exaggerated rate cut could drag down the markets for a long time.</p>
<p>The likely lows that were supposed to be posted in October 2022 will have a high probability of remaining so for many years. They could represent the lows of the entire decade. Despite a certain short-term overbought situation, the markets are unstoppable and will be like this for a long time. Here is why.</p>
<p>We have highlighted several times that stock prices tend to move at least 6/9 months before the economic cycle. For this reason, during the final part of 2022, the markets would have posted a significant bottom between June and October and then taken off again for the long term. The prices marked during the year had discounted the most unfavourable, geopolitical and geo-economic conditions.</p>
<p>During 2023 we expect the following pattern to emerge: the low should be posted in January or during Q1 2023, and the high during Q4. Average market returns up to 20-25%.</p>
<p>As always, we will confirm the annual forecast from time to time.</p>
<p>The S&amp;P500 touched last week&#8217;s highs, crossing the monthly resistance of 4595-4607, and reaching 4613.</p>
<p>The 4595-4607 area is the control area, from which prices could restart for additional increases or a starting point of a weekly correction.</p>
<p>New supports in the 4592-4582 area. The loss of this latter zone could lead to swift corrections up to the 4562-4552 support, crucial for the ongoing upward movement.</p>
<p>Additional supports in area 4542-4538 and 4528-4523.</p>
<p>4517-4510 and 4503-4494 confirmed. The support in the 4491-4474 area is critical, and the loss of this latter area could bring steep corrections. The target appears to be the support in the 4428 area, which is confirmed as a weekly level.</p>
<p>Confirmed 4411-4409, 4397, 4390-388 and 4371-4384.</p>
<p>4363 level is again confirmed, the breaking of this important level could lead to swift corrections towards 4334-4327, 4320-4315, 4303-4292 up to 4256, which remains a key support for the ongoing rally. Additional supports in areas 4244-4223, an overbought area, 4190-4185, and 4164-4158.</p>
<p>Late November support at 4138-4124 became the new monthly support. 4117 and 4100 are confirmed. The loss of the latter support could lead to heavy drawdowns in the medium term.<br />
Confirmed the supports in 3930-3905-3899, 3945-3957-3961, 3979, 3993-4000, and 4032-4043 areas. The 4064-4075 areas remain a crucial support for the whole year.</p>
<p>3890-3879 is still a critical area because, in this specific area, buyers managed to concentrate. Additional support in 3864-3857 areas. Another intermediate zone is located in the 3822-3814 area.</p>
<p>Support in the 3808-3798 zone was confirmed, below which prices could start a new downward spiral.</p>
<p>Confirmed supports in 3669, 3680-3689-3701, 3711-3726-3733 areas.</p>
<p>3762 and 3711 are the monthly levels that support the current uptrend, so beware of any breakout of these levels: We could witness a new trend reversal.</p>
<p>The psychological support of 3600 remains crucial. The support at 3644-3651 has halted the fall and is now the monthly support after this solid uptrend. It shouldn’t be reached again, to avoid new and heavy downward movements. Below is the 3607 level. Then again, the 3557-3547, 3538-3524, and 3514-3507 are support levels. The 3485 support is now the annual, critical, and historical level for the S&amp;P500 index. We will monitor whether this last level could stop, at least in the medium term, the bearish direction of the markets. Should we go beyond it, 3200-3300 will be the target, sought after by funds, investors, and traders halfway around the world.</p>
<p>Resistances 4617-4622 and 4629-4632 are confirmed. The breakdown of this latter zone could lead to a stable price reversal in the long term.</p>
<p>The upside targets are still 4662 and 4680, where important resistances have a foundation before being able to witness new historical highs.</p>
<p>The weekly closure above 4613 guarantees the annual trend reversal if confirmed on a monthly basis; the following targets remain 4717 and 4780.</p>
<p>How to move? To continue the upside movement we must not lose the weekly support at 4428. After the 8 December, the deadline for insider flow activities, we will evaluate the unfolding of the events. The odds favour the continuation of the upward trend and are unlikely to see retracements above 2% until the end of the month.</p>
<p><img fetchpriority="high" decoding="async" class="alignnone wp-image-27596 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Dax-1.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Dax-1.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Dax-1-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Dax-1-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Dax-1-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Dax-1-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /><br />
<strong>DE40</strong> &#8211; Last week, the German index was pierced at the resistance of 16517-475, reaching new historic highs in the 16793 area.</p>
<p>The control zone is located in area 16724-16807. Maintaining this area every week guarantees the continuation of prices towards new historical highs.</p>
<p>New supports in area 16718-657-623, 16594-539 and 16496-430.</p>
<p>Support at 16416-306 confirmed which becomes weekly. Only below this latter area, the Dax could begin a serious retracement.</p>
<p>Additional supports in the 16263-223, 16198-163 and 16132 area. These levels are great areas to look for long entries. Below 16132 prices can accelerate strongly downwards, towards the new critical support at 16025-15958.</p>
<p>15918-872 is confirmed, below this level, we could observe swift downward corrections with targets at the key volumetric supports of 15679-620 and 15589-533. Additional support in areas 15422-384 and 15315-252.</p>
<p>15130-097-070 and 15036-15000 confirmed. Monthly support in the 14935-895 area. Other supports in the 14874-801 and 14775-730 area. 14662 and 14625-590 confirmed.</p>
<p>Confirmed intermediate supports 14138-184, 14342, 14414-545.</p>
<p>Critical area in the 13814-781 zone. The loss of the volumetric zone 14069-13974 opens the gateway to the monthly support in the 13621 area.</p>
<p>Solid supports in areas 13692-608, 13550-516, and 13457-410. Supports 13314-333, 13331-410, 13438-467 are again confirmed.</p>
<p>Confirmed volumetric supports in areas 12865, 12833-12909, 12978-13038, 13113-178, 13222-280, 13307-357.</p>
<p>Confirmed the supports in area 12808-766. From 12628 to 12766, there are a series of intermediate supports, helpful for long entry from pullbacks. 12566 becomes monthly support.</p>
<p>Additional critical supports are 12407-517 for the concentration of volumes. 12353-275 is the first bullish turning zone. Confirmed support in areas 12223 and 12136.</p>
<p>It was also confirmed support in the 19920-15006 area. This is 11875-11950-12024, which halted the price fall after the US CPI data on the 13 October 2022. Losing it would mean new bearish pressures and a touch of the weekly support in the 11766 area; with extensions to 11650 and 11542 below it. The 11095 mark could be a target in case of a massive sell-off. These levels can be considered annual reversal points.</p>
<p>Breaking and maintaining the 16724-16807 level opens up the possibility of further historical targets, such as 16800-17000, with potential extensions in the 17500 area.</p>
<p>If by the following Friday, prices remain above 16664, we could witness a chance for a continuation of a bullish movement on a monthly basis; below 16252, the trend will move firmly downwards again.</p>
<p><img decoding="async" class="alignnone size-full wp-image-27599" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Dow-1.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Dow-1.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Dow-1-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Dow-1-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Dow-1-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Dow-1-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /><br />
<strong>US30</strong> &#8211; Last week the US index breached the control zone located in the 36099-36236 area, signaling the path toward new annual highs.</p>
<p>36094-36300 is the new control zone; from here we could have new upward accelerations or heavy drawdowns.</p>
<p>New supports in area 36013-35872, 35813, 35717-570, 35459-370 and 35337-237 (weekly). These are proper areas to take into consideration for possible long re-entries in the event of price corrections.</p>
<p>Supports in the 35206, 35140 and 35052-34946 areas confirmed.</p>
<p>34880, 34833-796 and 34717-630 confirmed which is the critical volumetric support. The loss of these supports will be due to swift corrections at target 34383-210 and 34082-33929, which becomes the new monthly support.</p>
<p>Confirmed 33868-811, 33767-598, 33557-457 and 33384-192. Monthly support in area 33133-057. Additional supports in area 32896-792.</p>
<p>New monthly support in the 32771-650 area. Critical supports was confirmed in areas 32600-524 and 32393-331.</p>
<p>Confirmed supports are located in two overbought areas: 31197-497 and 31536-764. Additional support areas are placed at 31753-920, 32111, and 32276. The 31861 level still remains a key one.</p>
<p>31036-31125 is still to be considered critical support for the monthly level. Confirmed 30953-815, 30715-614, 30559-381, 30253-136, and 29696-29906.</p>
<p>The 29485 mark remains a critical one. In addition to the 29619-529 and 29338-29264, the support zones 29159-28876 and 28800-28685 are again kept. These are all excellent supports to look for long entry opportunities from pullbacks. Should they all be pierced to the downside, prices could move toward 28319, 28051, 27765, and 27019 in extension.</p>
<p>At 35620, the gap of Tuesday 2 August will be filled. Final resistance in the 35673-715 area.</p>
<p>A monthly positioning of prices above 35599-963 would offer a new bullish direction on an annual basis; a movement that will cross 36529 and maintain this level would offer the possibility of seeing the 37000 (new historical highs) area if prices forcefully break the last resistance located in the 36786 area. Above 36174 we keep the possibility of further volumetric upward pressures. Heavy drawdowns are still possible under 35960</p>
<p><strong>IMPORTANT NOTE:</strong> This week, the market is expected to create some turmoil, but without affecting the uptrend. If there are no changes in sentiment and positioning, the market will quickly absorb any correction.</p>
<p>Also, this week, it is wise to note Monday’s openings and Friday’s closings for confirmation or denial of the current trend. Avoid overtrading and watch for volatility imparted by HFTs. Mark any gaps that may also appear during the week, with particular attention to those on Monday.</p>
<p>Happy trading!</p>
<p>&nbsp;</p>
<p>The post <a href="https://www.keytomarkets.com/blog/analysis/dax-40-dow-jones-weekly-analysis-11th-15th-december-27595/">DAX 40 &#038; DOW JONES: weekly analysis 11th – 15th December</a> appeared first on <a href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>