Hello and welcome to CantosCharts. My name is James Hughes from CMC Markets.

Today we're going to look at equities markets and we're actually going to look a little bit closer at the Dow Jones and how the US markets are looking to react this European situation that we've got.

Now what we've got here is a daily chart of the Dow Jones. We've got some moving averages, a 50 day, 100 day and 200 day moving average on there as well as a little bit of a support line on there which is really going to hold up what we're talking about and is holding up the price at the moment.

Now of course we've seen quite a lot of negativity in terms of equity markets. We spoke yesterday about how commodities are starting to turn round and that possible death cross on the CRB which has really got a lot of people quite worried about how commodities are going to perform. The knock-on effect to that situation is then going to be the negativity in equities.

Now we look at US equities and we look at European ones and you could think that there is a different situation going on in both of them, but of course we still have to look at the eurozone issues which are really dominating what's going on on both sides of the Atlantic at the moment.

We talk about the FTSE and the DAX. We've seen some real downward moves pretty aggressively on those, but again, if you look at how aggressive the moves are down on the FTSE and the DAX, we're getting quite aggressive moves back to the upside.

So showing that the markets aren't completely decided that equities are that negative and are really looking for a real heavy fall, we get falls. This is unlike the likes of the EUR. We're getting falls on the EUR and, okay, they're being followed by gains, but gains nowhere near as aggressive as what the negative falls have been. Now that's a slightly different story in terms of what we're seeing on equity markets and especially this Dow Jones. We're seeing a lot of movements there.

Okay, we've seen some big aggressive falls towards the last few days or so in this chart. We've seen the Dow, as we know last week, fall off 375 points on one day, rebounded Friday 125 points, but still we've got these market moves at the moment which don't look like they're going to go away because of this uncertainty situation which is really continuing to show. But what we've got here is how the markets are being held up.

Now we've firstly got a little bit more of a negative sign that these markets are dropping down, but the last few days or so, as this European sovereign debt situation has grown, we've seen the 50, the 100 day and the 200 day moving averages all broken by the price action. So we've seen the price. Okay, when we broke the 100, we quickly jumped back up, but again, we've seen break through then the 200 day moving average and it hasn't necessarily done that too strongly.

If we look when we did break the 200 day moving average, we see the spike of the candle wick is all the way down at the bottom. We didn't close at that negativity. We didn't close right down at the lows of that day. We in fact rebounded quite a lot higher than that.

So again, that was pointing just a little bit more of a positive sign that maybe we wouldn't go too much lower but then the next days of course we've been followed by yet more uncertainty in terms of how the markets have been performing and they've broken back down below those levels yet again.

So the negative signs are there that because we've broken the 200 day moving averages, the 100 day moving averages that that is really going to lead us to more negativity and of course if you take in what we were talking about yesterday and the commodity side of things as well and how negative they were looking, then you wouldn't be too surprised to see everyone talking that we could be going a lot lower on equities as well. But we've got some real key support levels underneath that.

This is a level at 9,800. Now that's a long way down from where we are. It's another almost 300 points or so from where we are at the moment and we could see these levels tested but of course we have to take into account the fundamental side of what's going on.

We've seen a pretty strong earnings season out of the US. We've still got a pretty strong economic recovery going on in the US as well. Now the big question is to how negative these markets are going to be is how much the eurozone problems are going to cross the Atlantic and cause a problem for the US as well. That's really yet to be seen.

Only recently in the last couple of weeks have we seen President Obama talking about the European situation and the fact that they won't get involved. They're not going to be looking at helping out in terms of bailouts.

In terms of the US, the eurozone problem is a eurozone problem and doesn't involve the Americans too much at the moment. But the talk is that at some point the US will inevitably have to get involved in this and have to come over maybe to help or whatever that sort of action has to be, but there will be some sort of move.

That's what's causing a lot of the worries in the US at the moment and that's what's causing a little bit of this negativity in terms of the equity markets and of course the fact that we're seeing the sell-off in terms of the Chinese markets and the overheating economy there. That's causing problems for equity markets as well.

So equities are their own little story at the moment. They have so many things coming in from either side. They have the commodity issue as well as the eurozone issue. But at the moment on the Dow Jones we have to be looking at how we're going to perform and whether we're going to bounce off of these levels.

Now we have seen this break below this 200 day moving average. That is a negative signal, but at the moment we're not seeing the markets too aggressive. We're seeing a bit of sideways trading. Now this could just be a brief respite before we go down and test maybe this 9,800 level on the downside, or it could be the sign of something starting to turnaround a little bit.

But at the moment, it's definitely holding its way up. It looks like we're getting a little bit of a holdup in terms of the 10,000 level. Now we get these big psychological levels as well which do hold things up and that looks like it's doing that at the moment. But they don't always have the legs to hold things up indefinitely. We've got a couple of spikes below that 10,000 level which indicates that we could be going that little bit lower. But at the moment, there's a lot of uncertainty in terms of these equity markets as well. But if we're holding up at the moment, that seems to be good news. If we get a slight turnaround into commodities and some of these problems are ironed out in the eurozone and the US and the UK, then equities might help themselves by starting to level out that little bit more as we get over the next couple of weeks or so.

Thank you for watching CantosCharts. My name is James Hughes from spread betting firm CMC Markets.