There are so many narratives currently, so it is hard to observe and follow them all. The global macro picture is very fluid at the moment. We have imploding yields, US/China trade war, Brexit, Italexit, German recession that is starting to look like depression, Fed uncertainty to name only a few of the narratives.

At times of too many things to focus on it often pays off to take a “simple” view of where we are trading and what levels are of importance. 

Below are simple charts of the main US indices as well as the DAX. 

The SPX bounced nicely off the longer-term trend line as we suggested last week. The bounce reached approx. 50% of the entire move down, which we the described as wait and see mode for markets. The crowd is very bearish, and sentiment is rather bad, but the simple take here is to watch the longer-term trend line. 

The SPX has not gone anywhere for several months, despite things having felt both bullish and bearish. The trend from December lows is still up, but there is no real trend if you look at the markets over the past 4-6 months.

NASDAQ has lost the mojo but paints a similar picture to the SPX. The index has not gone anywhere since April. Note the trend line since December. 

We would watch both the SPX and the NDX trend lines for first supports. Should a break of the trend lines occur we would need to reassess the current “narrative”.

As we write this, the DAX is selling off post the horrible ZEW reading. DAX is a big China proxy and is trading at delicate levels. The economy is doing poorly and the German 10-year yield is hitting new daily lows over the past weeks. The big level to watch is the 11600 area. 

Seems we are getting close to make or break.

Source, charts by Tradingview