Keep in mind that the market has been very noisy for a while, and even though we have had a nice move to the upside, we have not changed the overall trend.

• The German DAX Index rallied again Monday but gave back the gains to form a shooting star.
• By doing so, the market looks as if it will continue to hear a lot of noise right around the €13,650 level, a place where we had seen a bit of a gap previously.
• Because of this, it makes quite a bit of sense of the market may struggle here.

Selling Pressure Ahead

Furthermore, it’s difficult to imagine that the German economy is suddenly going to take off due to the fact that there are a lot of concerns when it comes to energy, and therefore it’s likely that we would see a lot of negativity here. Ultimately, the market is likely to continue seeing quite a bit of selling pressure due to the fact that we have seen so much in the way of negativity when it comes to the economic outlook that this market will continue to be faded.

The 50-day EMA underneath should offer a little bit of dynamic support, but I think given enough time we will see a lot of selling pressure to at least test that area. If we break down below there, then it’s possible that we could go down to the €13,200 level.

On the other hand, we could see this market break to the upside, based upon some type of FOMO. If that were to happen, it’s possible that we could go looking to the €14,000 level. The €14,000 level will be psychologically negative, but that does not necessarily mean that it would hold the market. At that point, you would have to see how other stock indices around the world are behaving, because they will all more likely than not move in the same general direction.

The markets are so interconnected right now it’s all about the growth prospects of not only Germany, but the rest of the world on the whole. After all, Germany is a major exporter of goods to various countries around the world, so if the global economy starts to fall, that most certainly will have an effect on the German economy also. Keep in mind that the market has been very noisy for a while, and even though we have had a nice move to the upside, we have not changed the overall trend.

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Clearly the stock market is hanging on by a thread most days, as it seems to take less to push lower than it does to push it higher.

The S&P 500 initially tried to rally during the trading session on Thursday but got absolutely hammered later in the afternoon. By doing so, the 200 Day EMA is being threatened, and a breakdown below there then opens up the possibility of threatening the lows of the Monday session, and then sending this market much lower. That would be a huge reversal, and a market that quite frankly is living on borrowed time as it appears.

You can make an argument for a bearish flag be informed, but we have not broken through the bottom of it so is not necessarily a signal to get short quite yet. However, breaking down below that Monday candlestick would most certainly qualify as a selling signal, and could open up a move down to the 4300 level, possibly even the 4100 level over the longer term. This could be rather quickly, due to the fact that there seems to be a lot of concern out there, and that typically leads to massive and vicious moves to the downside.

It is obvious at this point that the 4500 level continues to cause major headaches, and therefore the market breaking above there would be a very bullish turn of events, not only because it would be a big figure being broken above, but it would also be a major reversal of the overall downward move of a ripping day.

The only thing I think you can count on at this point is going to be a lot of volatility, but quite frankly that is going to be the case with most markets, not just the S&P 500. The futures markets of course will take their cue from risk appetite in Europe and Asia, but the real question will be how will the underlying index behave? It is obvious that the Americans are paying close attention to so-called “Fed speak “, as there are numerous Federal Reserve officials giving speeches. Oddly enough, Wall Street does not believe that the Federal Reserve is going to tighten very quickly, while the Federal Reserve squares up and down that is going to. This sets up for an ugly turn of events, but clearly the stock market is hanging on by a thread most days, as it seems to take less to push lower than it does to push it higher.