Sometimes looking at the most basic charts can make you see things clearly. Currently there are many moving parts in the global “narrative”. Trump, China/US, Brexit, Emerging Markets, Italy and much more.
We have been pointing out various sentiment indicators we watch on a global basis, and there are several indicators starting to flash red as well as some divergences developing, but below we would like to look at the “most simple” charts of Europe´s two main indices.
The Eurostoxx 50 has retraced a bit after hitting the longer-term negative trend. Europe is a mess and the economy is not doing well. The index is up close to 13% from recent lows and has turned lower after hitting the negative trend line. We saw exactly the same type of move last year, when the index bounced 13% from those March lows in 2018, hit the negative trend, and then sold off again.
The relative dog, the once mighty DAX, looks similar to the Eurostoxx 50, but with a more muted momentum. The index reversed right on the negative trend line as well as the upper short-term negative trend.
Both indices are approaching big supports here, the Eurostoxx 50 at 3300 and the DAX at 11500. Things could become fluid should we see these indices close below the support levels.
Source; charts by Bloomberg