As frequent readers of The Trader know, we have been rather bearish on the markets over the past months. The formation we wrote about during the “topping” out phase, all broke down, and have now reached crucial support levels. We are not suggesting this is the all in bottom, but from a trading point of view, many European indices are reaching support levels and we are probably looking at an aggressive boune to the upside. Our long term view is still with a bearish bias, but in the short term time frame, we expect the support levels to hold.
Essential chart update below.
It feels the markets have been all over the place, but in fact, the “real” markets have traded in a range over the past weeks. The Eurozone momo countries have fallen aggressively over the past months. IBEX and the MIB have reached some short term support levels. If these levels break on us, it will be nasty. SPX and the DAX on the other hand, have been accumulating for a break out soon.
Essential charts below.
Europe in reality check mode today. Our readers know The Trader has been rather pessimistic on the Spanish economy and the Spanish markets for the past year. Ibex is currently trading down 3%. The low close in 2009 was at 6820. Are we taking out this level today? Still they tell you equities are good long term.
European dog charts below.
Unfortunately, Apple won’t save Europe. The Spanish market is once again showing very weak action, followed by the Italian MIB.
European charts below.
The DAX has been the stealth performer over the past year. With the Med countries falling into the abyss, the stabile German index has been the absolute outperformer in Europe. The DAX outperformance has been “cooling” off lately though.
Let’s see if the extreme spread starts reversing some going forward.
The few lucky ones that bought the SPX or the DAX in the very first week of January are positive on the year. Anything else you bought (including the DAX and the SPX at a later stage) you are negative on the year.
All in all, momos are now long and wrong.
Chart for the sober look presented without further comments.
IBEX is down some 20% YTD, and approaching the the magic lows of 2009.
MIB is down some 8% YTD.
The Dax has formed a big head and shoulders pattern about to break down, and the Eurostoxx 50 is trading badly.
Essential charts below.