Is this the end of gains on the stock exchanges?

Political uncertainty has fueled the rise of stock exchange indices. However, this fuel is running out and stock markets must look for new impulses. Unfortunately, you can be afraid that this time it will be factors that will bring them down.

Today or tomorrow at the latest, we will all find out who will become the new US president. We will, of course, find out from the electoral votes collected, because the actual election of the electors will take place in mid-December. Nevertheless, it is enough to close the chapter entitled "US presidential election". And even if President Donald Trump wants to vote and count the votes, challenge them in court. Thus, the uncertainty surrounding American politics will end.

It's a good news

However, not for everyone. Wall Street and other stock markets were very comfortable with the election uncertainty. It has been used to raise share prices. Hence, closing the topic of the elections will mean that investors' attention will have to focus on other factors.

What may be absorbing the market's attention from next week? As the quarterly earnings publication season is slowly coming to an end, it will most likely be a pandemic and macro data. And that's definitely not good. Especially for Wall Street. The pandemic in the US, which is delayed by some 2 weeks in relation to Europe, is accelerating with each passing day. As a result, yesterday the daily number of new cases exceeded 100, and soon health service problems and the prospect of restrictions and lockdowns will appear on the horizon.

The macro data is not a good omen either. Yes, the latter are still very good (this will also apply to the monthly data from the US labor market released on Friday), but they will worsen with each passing week. Additionally, it will be matched by pessimistic expectations regarding the pre-holiday shopping season in the US. This year it will be suppressed by a pandemic. Hence, the only chance to improve moods will be expectations for the new stimulus package.

The only question is is it enough?

The above-described decay of the upward impulse and the emerging risks for the equity markets look even more serious when they are confronted with the situation on the charts. US500 quotes after a return from the September low, supported by 23,6 percent. abolition of Fibo, made an "election rally" towards the resistance zone 3525-3588,18. This not only significantly reduces the possibility of further increases, at least when judged on the basis of technical analysis, but even prevents them. Hence, a return from this resistance zone is a more likely scenario than a breakthrough.

US500 daily chart. Source: Tickmill

The UK100, which after a recent pivot from the lower bound of the 5-month downturn channel, is now close to its upper bound, also has an increasingly smaller room for growth. Bearing in mind that the downtrend is dominant, now a return from resistance seems much more likely than a reversal of declines on October 30th.

UK100 daily chart. Source: Tickmill

The situation on the German DE30 is the least unambiguous. At the end of October, after the rate fell to 11324,10, the earlier breakout from the bottom from the slightly upward channel visible on the chart was fully realized. In addition, there was a return from 38,2 percent. Fibo. The downside potential has therefore been exhausted. Hence, an increase in the area of ​​12500 does not have to be a return move, as the bears probably would like. This may be the first phase of the upward impulse that will eventually lead to an attack on the September highs. In a worst-case scenario for bulls, before DE30 will jump to higher levels, once again go back to October lows. And that would be a shopping opportunity.

DE30 daily chart. Source: Tickmill