Bantleon: Eurostoxx50 and S&P 500 Show Upward Potential

Hermann Bantleon GmbH's analyst Alexander Posthoff assesses that recent price corrections in the Eurostoxx50 and S&P 500 stock indices have been moderate and have improved the technical outlook, suggesting potential for future gains.

The Eurostoxx50 index has seen a decline of approximately 6% from its peak, returning to levels last seen in July. Posthoff notes that the index's support level at 6,200 points has held, and a prior "hammer" formation suggests a potential bottom. Any further decline towards the 200-day moving average at 6,063 points is considered limited, with a break below 6,000 points being unlikely. The preferred scenario involves the index breaking out of the short-term downtrend established since August.

Technical indicators support a positive outlook. The MACD indicator is nearing a buy signal, momentum has turned upward, and the stochastic indicator shows an oversold condition. These signals point to significant recovery potential.

The S&P 500 index has only retreated about 3% from its high and has traded sideways since May. A recent daily candlestick pattern indicates a possible intermediate low at 7,507 points. The analyst views pullbacks as buying opportunities, given the strong support zone between 7,250 and 7,300 points. A sustained move upward could see the index reach 8,000 to 8,200 points by year-end.

The increasing investor pessimism, as indicated by surveys like the AAII Investor Sentiment Survey showing a decrease in bullish sentiment, is interpreted as a contrarian buy signal. This suggests that the market may be approaching a bottom.