​​​​Indices Moving Higher Despite Fears of Widening Middle East Conflict​​​​

Article by IG Chief Market Analyst Chris Beauchamp

Dow Jones, Nikkei 225, and CAC 40 Analysis and Charts

​​​Dow targets 34,000

​The index moved back above the 200-day simple moving average (SMA) on Monday, something that has eluded it since the second half of September. ​Monday’s session marked the revival of the move higher from the beginning of October, and a close above 34,000 could put the rally on a more secure footing. In the near term, the index will target the confluence of the 50-day and 100-day SMA,s and then beyond that the 35,000 area, which stymied progress in early September.

​ ​A reversal back below 33,500 could see fresh selling pressure emerge, and then the index may target 32,800 once more.

Dow Jones Daily Price​ Chart

How do Daily and Weekly Sentiment Changes Affect the Dow Jones?

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of clients are net short.

Change in Longs Shorts OI
Daily -6% 14% 5%
Weekly -18% 27% 3%

Nikkei 225 rebound slows

​Japanese stocks fell sharply in their cash session on Monday, but futures rebounded during the US session, with some positive momentum continuing into Tuesday. ​This seems to have stalled the downward move for the time being, and now the index will look towards the 32,500 level, which contained upside progress last week.

​From there, the price may move on towards 33,500, the highs from early September. A close back below 31,500 would open the way to another test of the 200-day SMA.

Nikkei 225 Daily Price Chart

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CAC 40 back above 7000

​The index gave back all the gains made in early October in two sessions last week, but it managed to stabilize above 7000 on Monday. ​However, the price will need to close above 7210 to suggest that a short-term low has been formed; price action since mid-September has seen selling pressure appear in this area, holding back upside progress. From there a move back to trendline resistance from the July highs could be contemplated.

​For the moment the selling appears to have paused, but a close below the late September low around 6944 could mark the beginning of a more bearish view.

CAC 40 Daily Price Chart

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