 Hello, welcome to CMC Markets on Wednesday the 27th of August and the weekly market updates and once again we're talking about record highs on the Dow Jones and the S&P 500. The S&P 500 has finally cracked that 2000 area. I think with the likelihood that we could well see further gains. The major support remains at the 1975 area and despite what I would call a fairly mixed economic data, there doesn't appear to be any signs that the current rally in the S&P is in any way running out of steam. Despite a slightly more hawkish Fed at Jackson Hole last week, Janet Yellen's comments were certainly fairly neutral and that for her is fairly dovish. I think Janet Yellen usually comes across as fairly dovish. The fact that she came across with a fairly balanced view has really raised expectations that the Fed is going to continue on its path of tapering and that the possibility of a rate hike over the next year or so still remains on the table. That is being reflected in the two-year yield on the US Treasury and it's also being reflected in the current stock market rally and the strength of the US dollar as well. That's helping push the Euro dollar lower. But it's not really that I want to talk about today. It's what Mr Draghi said on Friday. He was much more dovish than he has been in previous speeches and I think some market participants have construed that his comments do suggest a slight shift in thinking with respect to the ECB and the potential, and I'm talking about the potential here, further stimulus down the line. It's really in that context that I want to look at the German DAX and the French CAC Caron because we've seen significant rebounds in both those indices and they're currently at very key levels. I'm going to look at the German DAX and I'm going to look at the CAC Caron and look at the current rebound and see whether or not we've got any scope for further upside since the sharp declines from the highs that we saw in early July. I was going to have a quick look at Euro dollar and I'm going to also have a look at Euro Canada as well in the context of speculation about further measures by the ECB and next week's rate meeting. So let's start off with the German DAX. Now we've seen a significant slow down in a lot of the main economic indicators out of Germany. The IFO on Monday came in below expectations, consumer confidence has fallen back not only in Germany but also in France and Italy and the current rebound that we've seen so far from the lows in August is currently testing a very key resistance level. It's 61.8 Fibonacci retracement level on this daily chart in front of you from the highs that we saw in June around about 10,050. Now the lows came in around about 8,903. At 9,615, 9,620 we have a 61.8 retracement of that entire down move. Furthermore we also have the potential for a death cross because the 50 day moving average is now starting to cross lower and move towards the 200 day moving average. So this Fibonacci resistance level I think is a very key level in the context of the move that we've seen lower over the past five to six weeks. If we break back above it then we could well move back to the 9,700, 9,800 level. If we fail then we could well drift lower again. Now it's a similar sort of story on the France cat Caron. Now we saw earlier this week that the French government was reshuffled by Francois Hollande and the cat Caron rallied strongly on that. I think on the basis that the new government couldn't really be any worse than the old one. And we have a new economy minister. Mr. Montaborg has been pushed to one side and we have a new economy minister who I think markets are hoping will be much more business friendly. And again if we look at the daily chart in front of you we're again at the 61.8 Fibonacci retracement level from the June highs to the lows that we saw at the beginning of August. Those lows at the beginning of August were around about 4,101. We're around about 4,410 on the 61.8 Fibonacci retracement level. And like the German DAX that is going to be a key resistance level for any move higher. Unlike the German DAX we have seen a death cross on the 50 and 200 day moving average which generally is perceived as a negative signal. So how the price action unfolds over the next few days and weeks is going to be particularly crucial in the context of where we move to next. Now we talked an awful lot about the prospects of quantitative easing from the ECB and I think there's an expectation that the ECB even could do more or take extra steps at next week's policy meeting in September. So what could they do given the fact that the TLTROs are due to start in September? Well they could cut rates again. They could cut the rates from the 0.15% that they are now to 0.05 or even to zero. They could cut the negative deposit rate even lower from minus 0.1 to maybe minus 0.2. But overall will they take any extra steps in addition to the TLTROs that we're expecting to see in September and December? I don't think so. I think markets are over expecting as to what the ECB can deliver next week. That being said the potential for further downside in Eurodollar remains fairly high and we can see that on this daily chart. We've broken below 1.32 and a half and we now look set to test the 50% retracement level from the entire up move from the lows that we saw in 2012 to the highs earlier this year and that comes in around about 1.30-20. But for that move to unfold we need to stay below the 1.32-50 level and below that gap on the daily candles that we can see just below the move down from last week's Friday close. Further adding to the Euro negative picture I'm going to have a look at the Euro Canada chart because actually that's looking quite interesting. We've broken below a very key support level on the Euro Canada chart on this daily chart around about 1.44-18. You can see it highlighted. It's the July lows and the lows this year at the beginning of 2014 and it's highlighted by a horizontal line. The likelihood is we could well see a further decline towards around about 1.4-2.85 on a technical basis. The fact that we've broken below that key support level of 2014 lows would appear to suggest that we could well see further declines in this particular cross but we need to stay below 1.44-50 for that move to unfold. So that's pretty much it for this week. Once again, thanks very much for listening. This is Michael Houston talking to you from CMC Markets.