DAX 40 & DOW JONES: weekly analysis 23rd – 27th October
<h2>Market movers</h2>
<p>This week major US stock indexes experienced a significant decline, following Federal Reserve Chairman Jerome Powell’s speech regarding sticky inflation and the likelihood of an unchanged interest rate at the November meeting. Treasury yields have once again breached the 5% threshold, a level not seen since 2007. In the meanwhile, geopolitical tensions are rising. Israel is on high alert due to the potential escalation of the conflict with Hamas, while the United States and other Western nations have advised their citizens to leave Lebanon. The US quarterly earnings reports are reflecting a mixed situation, with gold surging as investors seek safe-haven assets.</p>
<p>The economic calendar for the week will bring some particularly important data.</p>
<p>Let’s begin with Tuesday 24 October, when we will evaluate the PMI in different sectors for Germany, the European Union, and the United States.</p>
<p>On Wednesday 25 October, in Australia will be released inflation data while in Germany we will monitor the IFO Business Climate. In the United States, we will have the building permits and the new home sales. Finally, the BoC will announce its interest rate decision. Cooling inflation has raised bets that the central bank will not hike interest rates at the October meeting. However, the Canadian central bank does not rule out further hikes in interest rates even in the background of growing geopolitical risks. Powell will deliver his speech after the market closes.</p>
<p>On Thursday 26 October the ECB will announce its interest rate decision. The meeting comes after the ECB raised interest rates by 25pbs in the September meeting and hinted that was the last rate hike of the cycle. Recent speeches by ECB officials, combined with cooling inflation and weak economic data, have supported the view that the central bank is at the end of its rate-hiking cycle. However, oil prices have spiked sharply, and investors will watch closely to see whether this changes the central bank’s stance.</p>
<p>Moving on Friday, the crucial data will be the PCE Core, which is the FED’s preferred measure to gauge inflation. Investors are keenly interested in this data set as it provides insights into the FED’s potential course of action at its meeting on November 1st.</p>
<p>This week some of the largest publicly listed companies in the world will report. Microsoft, Alphabet, Meta, Amazon, and Apple are all due to release quarterly earnings figures, and all five companies are expected to grow headline earnings. However, some will grow faster than others, boosted by cost-cutting efforts, resilient growth, and new AI prospects. The strongest earnings growth is expected for Meta and Amazon, while Apple is expected to post the weakest earnings growth.</p>
<h2>Weekly analysis and market scenarios for DAX and Dow Jones</h2>
<p>The international stock exchanges concluded the trading week posting multiple bearish signals. In early October the markets posted a large rebound as expected, however, the weekly closure witnessed notable downward pressure which will likely push price levels to new lows. Inflation is not retracing as rapidly as expected while the strong economic growth could force Central Banks to further rate hikes. The bond market is experiencing pressure, with the US 10-year yield at 5% and showing potential for further increases. The geopolitical scenario remains challenging.</p>
<p>From the lows of the week of March 13, the rise of the international stock markets 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>At this point, we might see another 10% decline by the end of November. The long-term trend would not be affected, but failure to rebound from the annual set-up in late November could worsen the situation.</p>
<p>The next crucial days will be toward the end of the month, and we should monitor if we can reach the month’s low and in that case, the market could rebound.</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 in October 2022 will have a high probability of remaining so for many years. They could represent the lows of the entire decade. Despite some short-term overbought, the markets are unstoppable and will be so 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>Last week, the S&P500 index posted a significant decline, after attempting to break down again the weekly resistance 4411-4416, but without success. Prices closed in the 4244 area on Friday.</p>
<p>The 4227-4223 have been confirmed and in these areas, trading volumes managed to concentrate as a result of the rise that began at the end of June.</p>
<p>Below 4223, there are high chances for further drawdown acceleration targeting the supports at 4204 and 4196-4190. 4177-4170 is still a critical mark.</p>
<p>Confirmed the supports in 4153, 4144-4140, 4124-4117, and 4100 areas. The loss of the latter support could lead to heavy drawdowns</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.</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 inversion.</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&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>New resistances in the 4260-4274 and 4289-4309 areas. New weekly resistance in the 4327-4350 area, the recovery of this level would open up the possibility of catching again the bullish trend. Other resistance in the 4379 and 4401-4409-4415 areas.</p>
<p>Above the latter level, the potential of strong bullish pressures remains, with intermediate resistance targets in the 4430, 4454, and 4470-4503. This entire area should be regained back to a rebound in price levels.</p>
<p>4510-518 is confirmed. Intermediate resistance in the 4525-4538 area and key resistance in the 4557-4564 area.</p>
<p>Confirmed 4575-4580 and the resistance offering a new bullish lunge in the 4595-4607 area. Resistances 4617-4622 and 4629-4632 are confirmed.</p>
<p>The upside targets are still 4662 and 4680, beyond which critical resistance levels must be overcome before reaching new all-time 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? There is a sell-off underway that hasn’t been witnessed since last year. All time frames, from monthly to daily levels, are switched to bearish positions. Let’s brace ourselves for days of panic and significant bearish movements. Caution is the watchword. Currently, it is not statistically the right time to trigger trades in the upward direction. It is therefore a good idea to wait for weekly closures, above the key resistances, before considering a bullish position.</p>
<p><img decoding="async" fetchpriority="high" class="alignnone wp-image-26472 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Prisco-XGER-1.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Prisco-XGER-1.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Prisco-XGER-1-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Prisco-XGER-1-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Prisco-XGER-1-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Prisco-XGER-1-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>DE40</strong> – Last week, the German index experienced significant declines, after reaching the resistance at 15251-316, and closing the week at 14762. This latter level hasn’t been seen since March 2023.</p>
<p>Supports in the 14737-603 area were confirmed, which became the new weekly levels. This latter area becomes the yearly level for new upward movements or heavy drawdowns.</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 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>Other key supports are 12407-517, for the concentration of volumes, and 12353-275, 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 October 13th. 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>New resistances in the 14807-916 and 14991-15075 area (weekly). The recovery of these massive areas could lead to new upward pressures on prices. Intermediate resistances in the 15144-101 and 15215-260 areas.</p>
<p>Last week’s levels are confirmed in the 15316, 15343-386, 15423-457, and 15484-547 areas.</p>
<p>Resistances in the 15588-687 and 15757-810 areas were confirmed.</p>
<p>15923, 15959-992, and 16024 confirmed. Above the latter level are possible new price accelerations.</p>
<p>16054-104 confirmed. Breaking these levels could lead to a fast rebound up to key resistance at 16225-253, where Tuesday’s 2 August gap will be filled. Additional resistances in the 16272-335 area, the breaking of which could lead to the annual highs in the 16517-475 area.</p>
<p>If by the following Friday, prices remain above 15042, we could witness a chance for a continuation of a bullish movement on a monthly basis; below 14833, the trend will move firmly downwards again.</p>
<p><img decoding="async" class="alignnone wp-image-26475 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Prisco-XUS30.png" alt="" width="1916" height="840" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Prisco-XUS30.png 1916w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Prisco-XUS30-300×132.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Prisco-XUS30-1024×449.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Prisco-XUS30-768×337.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/10/Prisco-XUS30-1536×673.png 1536w" sizes="(max-width: 1916px) 100vw, 1916px" /></p>
<p><strong>US30</strong> – Last week, the American index failed to break the resistance at 33954, which if broken could have triggered a new strong rebound. On Friday, prices closed significantly lower, in the 33079 area, despite the impressive quarterly earnings reported by the major American banks.</p>
<p>Support in the 33113-028 area is confirmed and the weekly support levels are placed in the 32976-878 area.</p>
<p>Below it, new bearish accelerations are still possible. Other supports in the 32804 and 32725 area, monthly supports.</p>
<p>Additional supports in the following areas: 32499-632, the loss of which could lead to a trend reversals on a monthly basis. Next supports: 32801-875, 32945-990.</p>
<p>Confirmed supports placed in two well-bought areas: 31197-497 and 31536-764. Other support areas are placed at 31753-920, 32111. The 31861 level still remains a key one.</p>
<p>31036-31125 is still to be considered critical support for the monthly level and 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>New resistance levels in the 33192-388 and 33509-689 areas. Only overcoming these zones would guarantee the return of substantial buying orders. Weekly resistance in the 33865-962 area.</p>
<p>33587-687, should be recovered swiftly to have new possibilities of upward pressures. Other resistances in the 33746-806 and 33861-918 area.</p>
<p>34155-188 confirmed which is still a key resistance.</p>
<p>Other resistances in the 34270-364-412 area. The breakdown of this latter zone could lead to a strong rebound, up to the key resistance levels located in the 34617-779 area.</p>
<p>Confirmed 34801-833, 34868-913, 34985 and 35020-050.</p>
<p>35109 is confirmed, and a breakout above it could trigger a strong rebound. Additional resistances are at 35166 and in the 35273-378-444 area.</p>
<p>35539-591 confirmed. At 35620, the gap of August 2nd will be filled. Final resistance in area 35673-715.</p>
<p>The break of this monthly resistance zone opens the gateway to the 36068 weekly target.</p>
<p>Monthly positioning of the price above 35599-963 could offer a new bullish direction on a yearly basis. A movement that will go through 36529, managing to keep this level, would offer the possibility of reaching the 37000 area if prices forcefully break the last resistance placed in the 36786 area. Above 36236, we keep the possibility of further volumetric upward thrusts.</p>
<p><strong>IMPORTANT NOTE:</strong> The market is under pressure so it’s crucial to trade less and more effectively. The situation could change overnight, so bankroll management is still very important.</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>The post <a rel="nofollow" href="https://www.keytomarkets.com/blog/analysis/dax-40-dow-jones-revisione-settimanale-23-27-ottobre-26502/">DAX 40 & DOW JONES: weekly analysis 23rd – 27th October</a> appeared first on <a rel="nofollow" href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>
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