Markets continue 2019 pretty much with same sentiment as we saw develop throughout the autumn of 2018. Volatility continues, and is probably exaggerated by low volumes as most investors still digest the holidays.
Credit was a huge driver of risk since the October sell off. European credit, iTraxx main, continues moving higher today. Note that this space continues to trade “stressed”.
The below chart of Eurostoxx 50 futures, VG1 (orange), continues moving in tandem with the iTraxx (white inverted). We will watch for possible “dislocations”, but here, the two assets are rather fairly priced as a pairs trade.
Eurostoxx 50 continues trading within the negative trend channel that has been in place since August/September. 3000 is the big level to watch for a possible short term break out possibility, while recent lows at 2900 is crucial short-term support area.
DAX looks similar to the Eurostoxx 50 index. Intact negative trend remains the theme. Watch 10 500 carefully, as well as recent lows at the 10260 level. First bigger resistance is at the 11k level.
Source; charts by Bloomberg