The bigger trend has been bearish since the beginning of this year for stock markets, although they have been retracing higher since early July. Stock futures rose on Monday morning, following the S&P 500′s third straight weekly gain, as investors shifted the focus away from the US ISM services report released last Friday, to a key inflation report this week.

The US CPI (consumer price index) inflation report, as well as the PPI (producer price index) report, will be released later this week, and are expected to show a slowdown in July. The USD jumped higher after the ISM non-manufacturing report late last week which showed a decent expansion in activity while stock markets retreated lower, as odds of a 75 bps rate hike from the FED increased. But, now markets are looking ahead to the inflation numbers, which are expected to show a cool-off and lower the odds of such a rate increase from the FED again.

Dax30 Daily Chart – The 100 SMA Acting As Resistance

DAX looks overbought on the daily timeframe

As we can see above, the German index DAX has been retracing higher in the last several weeks, but it stopped right at the 100 SMA (green) on the daily chart. Today though, stock-index futures were higher again, after the US Senate passed the bill on “clean” energy and healthcare, and ahead of inflation numbers that will provide further clarity on the direction of the economy and whether the Federal Reserve’s inflation-fighting rate hikes are working.

Dax30 Weekly Chart – The 20 SMA Stopping the Climb?

The retrace higher still has some more room to run on the weekly chart

Monday’s stock market gains follow a weekly rise for the S&P 500 and the Nasdaq Composite as surprisingly strong monthly jobs report eased some recession fears. The resilient labor market also signaled that the economy could withstand more rate hikes from the Fed.

German Main Stock Index Dax30

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