Indices in fragile condition and could see further falls

Indices in fragile condition and could see further fallsThe last two weeks has seen the bears firmly in control of stock indices. We notice that the key support levels mentioned previously have now been breached as well as the UK and US indices now below short term moving averages. This suggests that the markets are in a weak condition which could see further falls if a turnaround has not materialised before mid-week. Crude Oil has also seen a continuation in its ongoing consolidation but appears as if it is looking to take out its recent low of $95.51 if weakness continues this week. The markets have shown that there could be further surprises in store with an increase in volatility leading to range expansion.

FTSE 100 starts the week below support
Trading below its 20 day moving average the FTSE 100 index had clearly wanted to stay with its negative mood. With the indicator pointing lower and with the index closing below 5787 it looks like this week could prove to be a tough one for the bulls to come and take control. There is an opportunity for a rebound to the upside if 5875 is cleared with an aim to reach for 5929 – 5970 otherwise staying below 5787 would suggest that the FTSE may be looking to trade lower to find support between 5702 – 5655. The weekly trend is now also starting to look weak which could help the bears drive the index much lower.

Dow Jones closes below the key 12,000 level
Unable to hold above 12,060 the Dow Jones may now want to trade lower towards the 11,838 level. There is quite a distance between the current price level and the 20 day moving average. Quite often markets tend to reach for this short term indicator. If the index manages to trade above 12,190 then 12,340 is where we may see the Dow trade towards which is currently
the level of the 20 MA. However a downside move would need to complete at 11,838 which is an important support level. Failure to hold could prove here could spell trouble for the Dow Jones.

Nymex crude oil edging lower
With a high in at $102.95 and unable to get past $103.90 Crude Oil managed to trade to the downside in Fridays session. This week could see a continuation lower if $98.35 is breached. The objective remains at $95.70 as a key support level and it would require the August contract to clear the Pivot at $103.95 to negate short term bearish views. Although momentum remains weak the 20 period moving average has now flat lined. This is typical in consolidations and a breakout above or below the range is needed soon.