Dow Jones index
US equities encouraging start to the year resumed last week as support held at the 2023 lows. The catalyst for the rise was better than expected US GDP figures, reducing the fear of a slow economy in 2023. In addition, technology stocks were strong, with Tesla rising 33% on the week, seeing the Nasdaq enjoying its fourth week of gains.
This week sees the Federal Reserve meeting to decide monetary policy, with a 0.50% increase in official interest likely. In addition, the release of US PMI and employment figures could also significantly impact US equities. The market is looking for good news, so there is a potential for a quick rise should the economic data beat expectations.
Despite the increasingly positive fundamental outlook, the technical picture remains mixed. The 10-day moving average is pointing sideways, and values are in the middle of the 33,000 to 35,000 range. The best strategy currently is buying weaknesses or following positive news releases.
Resistance: 34360, 34500, 35000, 35500, 36000, 36500
Support: 33500, 33000, 32500, 32000
Nikkei 225 index
The Nikkei 225 recovery continued last week, confirming the double bottom pattern when prices rose above 26550. The USDJPY continues to find support which is positive for Japanese equities. There is increasing confidence in the Japanese stock market in 2023 as there has been an enormous pick-up in tourism and inflation levels remain low.
The Nikkei 225 chart is bullish in the short term, but there is a gap down to support at the 10-day moving average. So, waiting for the market to fall closer to 27000 to buy seems like the best strategy this week. In the medium term, the Nikkei is still in a range with a resistance test at 28500, likely in February.
Resistance: 27500, 28500
Support: 27,000, 26250, 25500, 25000, 24500, 23500