DAX 40 & DOW JONES: weekly analysis 4th – 08th December

<h2>Market Movers</h2>
<p>The main US stock indexes carry on their upward movement this week as well. Some Fed speakers, most notably Fed Governor and well-known hawk Christopher Waller, signaled that the Fed could consider rate cuts should inflation keep falling.</p>
<p>A more accommodative Fed could drag down Treasury 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.</p>
<p>The economic calendar will deliver important macro data.</p>
<p>Let’s start on Monday 4 December, with a speech by President Lagarde of the ECB and the US factory orders.</p>
<p>On Tuesday, 5 December, it will be the turn of the Chinese PMIs and the Reserve Bank of Australia will announce its rate decision. The RBA hiked rates to a 13-year high of 4.35% in the previous meeting, which, according to the OECD, is the peak rate. The market is pricing in just a 2% chance of a hike. Australia’s inflation rate eased to 4.9% in October, supporting expectations that the RBA will leave rates on hold. This is the final meeting of the year, with the following announcement in February. In Germany, we will monitor the PMI composite index while in the United States, it will be crucial to check the ISM non-manufacturing index and the new JOLTs job openings.</p>
<p>In the United States, the ADP Index will be released on Wednesday 6 December along with the Bank of Canada’s interest rate decision. In the speech given the previous week, Governor Tiff Macklem hinted that peak interest rates had already been reached. He suggested that the current rate levels could be sufficient to bring inflation back to 2%, indicating a shift in the central bank strategy and supporting market expectations that the central bank could be at the end of its tightening cycle. No change in policy is expected from the BOC, although policymakers may look to keep the door open to a further hike should it be needed.</p>
<p>On Thursday, 7 December, China will publish its trade balance, Germany will release industrial production and the European Union will report quarterly GDP. In the United States, the initial jobless claims and the FED balance sheet will be released.</p>
<p>In the USA, it will be very important to evaluate the pending home sales figures.</p>
<p>On Friday, 8 December, we will see Japan’s GDP and consumption data. Germany will release data on inflation while the United States will publish unemployment rate data. The October nonfarm payroll rose by 150,000, below the average monthly gain of 258,000 over the previous twelve months and weaker than the 180,000 jobs expected. Unemployment ticked higher to 3.9% from 3.8% after the Fed’s aggressive rate hiking cycle. The market will look for a continuation of this current trend. Signs of weakness creeping into the jobs market could fuel bets that the Fed could cut interest rates sooner than initially expected.</p>
<p>Crucial to monitor will be the Eurozone retail sales data, which fell 0.2% in September, in line with forecasts. The data comes as the eurozone economy shrunk by 0.1% in the third quarter, and PMIs remained in contraction territory. However, with inflation cooling and consumer confidence ticking modestly higher, the outlook for the consumer could finally be improving. Stronger-than-expected sales could fuel expectations that the downturn in the eurozone economy had bottomed out.</p>
<p>The quarterly earnings reports will continue to flow as usual. Broadcom is set to release earnings on December 7. Wall Street is expecting an EPS of $10.96 on a revenue of $9.28 billion. The figures come as Broadcom closes its $69 billion acquisition of VMWare. The semiconductor and infrastructure software company’s share price has skyrocketed almost 80% year to date on the back of the AI wave while chip demand for personal computing and smartphones has been lukewarm this year. analysts are expecting the Q4 outlook to be more favourable. As a result, attention will be on guidance. Any strategic investments and commitments to AI make a more bullish case for the stock.</p>
<h2>Weekly analysis and market scenarios for DAX and Dow Jones</h2>
<p>The 11th month of the stock market trading sessions has just come to an end, which was positive for many global stock exchanges. However, it would be too simplistic to curtail the analysis only to November. First, because the whole 2023 is posting great figures and second, these markets’ performances are measured yearly and not weekly.</p>
<p>The setup of 30 November triggered new upward lunges, which could continue until 8 December, the starting date of the blackout period for the stock buybacks. 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>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 index further touched last week’s highs, reaching the monthly resistance of 4595-4607.</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 4580 and 4575-4568 area. The support in the 4562-4552 area is critical, it served as the foundation for last week’s increase.</p>
<p>Additional supports in area 4542-4538 and 4528-4523.</p>
<p>4517-4510 and 4503-4494 are confirmed. Key support in the 4491-4474 area, the breaking of this latter level could lead to deep corrections. Support in the 4428 area, which becomes weekly.</p>
<p>4411-4409, 4397, 4390-388 and 4371-4384 are confirmed.</p>
<p>4363 is 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 is the new monthly support. 4117 and 4100 are confirmed. The loss of the latter support could lead to heavy drawdowns in the medium term.</p>
<p>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>Monthly resistance in the 4595-4607 area is confirmed. Resistances at 4617-4622 and 4629-4632 were confirmed. The breakdown of this latter zone could bring 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? In the very short term, we can observe a certain degree of overbought levels which might result in a retracement of a few percentage points. To allow the rise to continue we must maintain the weekly support at 4428. After the 8 December, the deadline for insider flow activities, we will evaluate the unfolding of the events.</p>
<p><img fetchpriority="high" decoding="async" class="alignnone size-full wp-image-27475" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/DAX.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/DAX.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/DAX-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/DAX-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/DAX-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/DAX-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>DE40</strong> – Last week, the index witnessed an attack to the historic highs of July 2023, reaching a hundred points at the last resistance in the 16517-475 area.</p>
<p>New supports in the 16416-306 area, an overbought area that if kept could guarantee the continuation of the price action towards new historical highs.</p>
<p>Additional supports in the 16263-223, 16198-163 and 16132 area. These levels are excellent areas to look for long entries. Below 16132 prices could begin to accelerate strongly downwards, towards the new weekly support located in the 16025-15958 area.</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>All that is left for the Dax is the resistance in the 16517-475 area. Prices could push back on it and post a major correction. The break and maintenance of this zone, on a weekly basis, opens up the getaway towards new historical highs, first target 16800-1700 with possible extensions in the 17500 area.</p>
<p>If by the following Friday, prices remain above 16252, we could witness a chance for a continuation of a bullish movement on a monthly basis; below 15984, the trend will move firmly downwards again.</p>
<p><img decoding="async" class="alignnone size-full wp-image-27478" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/DOW.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/DOW.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/DOW-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/DOW-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/DOW-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/DOW-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>US30</strong> – Last week the index managed to cross our first annual target, the monthly resistance at 36068. Prices closed at the intermediate resistance of 36236.</p>
<p>36099-36236 is the 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 with targets to34383-210 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 support in the 32896-792 mark.</p>
<p>New monthly support in the 32771-650 area. Key supports are confirmed in areas 32600-524 and also 32393-331.</p>
<p>Confirmed supports placed 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>35273-378-444 and 35539-591 confirmed. At 35620, the gap of Tuesday 2 August will be filled. Final resistance in area 35673-715.</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 area if prices forcefully break the last resistance located in the 36786 area. Above 36236 we maintain the possibility of further volumetric upward pressures.</p>
<p><strong>IMPORTANT NOTE:</strong> The market is expected to rise smoothly until at least the 8th of December. 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-4th-08th-december-27474/">DAX 40 & DOW JONES: weekly analysis 4th – 08th December</a> appeared first on <a href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>