Below is a quick chart review of the main US and European indices. They have basically all reached the negative trend lines that have been in place for months. As we have been outlining, recent extreme price action has managed confusing (and hurting) most investors.
The sharp move lower in December has been reversed and most indices trade at the same levels we saw in early December. Indices are basically unchanged compared to a month ago, but the roundtrip has been huge. According to us, the complex issue of trend followers, vol explosion/implosion and the lack of liquidity has managed frustrating most investors.
SPX is up 13% from recent lows and is reaching the negative trend line that has been in place since early October. Note the index touched the 50-day average on yesterday´s highs. Watch the huge 2600 level closely here.
NASDAQ is up some 13-14% from Christmas lows. As we showed yesterday, most FAANGs are reaching resistance levels. NASDAQ itself is trading right at the negative trend line since October and the 50-day average is right here.
Note both the SPX and NASDAQ have the 100-day crossing the 200-day moving average a few days ago.
The Eurostoxx 50 continues trading inside the perfect negative trend channel that has been in place since last summer. Note the 50-day average slightly higher.
The DAX looks very similar to the Eurostoxx 50. DAX remains trapped inside the negative channel, trades at a big resistance and the 50-day average is very close.
Loading up on longs here seems a bit too late given the fact all indices have squeezed violently higher and over past days “forced” various strategies to load up on more longs.
We would love to see how a move lower from here would play out.
Source; charts by Bloomberg