DOW JONES, S&P 500, DAX 30, AND FTSE 100FUNDAMENTAL FORECAST:

• The Dow Jones and S&P 500 will look to FOMC minutes and the start of earnings season on Friday
• FTSE 100 traders will once again await Brexit clarity following Friday’s deadline

Dow Jones Fundamental Forecast: Bullish

The Dow Jones faces a relatively uneventful week from a data perspective, following last week’s slew of releases. That said, the index came out on top with assistance from news of a potential trade war resolution. In the week ahead, the Industrial Average will look to FOMC minutes on Thursday followed by the advent of earnings season on Friday.

DOW JONES PRICE CHART: 4-HOUR TIME FRAME (JANUARY 2019 TO APRIL 2019) (CHART 1)

S&P 500 Fundamental Forecast: Bullish

Last quarter’s earnings were relatively underwhelming, and another season of disappointment may materially impact share valuation – unlike last quarter. The S&P 500 should see greater volatility as the reports come out due to sheer numbers.

With only 30 constituents, the Dow Jones is exposed to far fewer reports and therefore the surprises that result in drastic price swings. With a locked-in monetary policy path and a potential trade deal on the horizon, it seems likely that the recent price trend will prevail again next week.

S&P 500 PRICE CHART: 4 – HOUR TIME FRAME (JANUARY 2019 – APRIL 2019) (CHART 2)

DAX 30 Fundamental Forecast: Bullish

The German DAX rallied significantly last week. Amid a flurry of technical levels and waning fundamental data, the index seems to be tied to other factors. One such factor is further easing from the ECB. Next Wednesday the central bank is scheduled to comment on its interest rate and monetary policy framework.

Further insight into the next round of TLTROs will be critical for the DAX. Like its US counterparts, there seems to be few reasons to bet against the trend heading into next week from a fundamental perspective. But the technical outlook may offer a different view.

DAX 30 PRICE CHART: 4 – HOUR TIME FRAME (DECEMBER 2018 – MARCH 2019) (CHART 3)

FTSE 100 Fundamental Forecast: Neutral

As always, Brexit remains the commanding risk for the FTSE 100. Discussions between Theresa May’s government and Jeremy Corbyn’s Labour party seemingly broke down Friday – just one week before the UK is scheduled to leave the EU. The extent to which UK MPs can agree, and progress, on an agreement next week will dictate the FTSE’s direction. 

Brexit Timeline

FTSE 100 PRICE CHART: 4 – HOUR TIME FRAME (JUNE 2018 – MARCH 2019) (CHART 4)