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German And French Stocks Send Message To The States

Published 08/29/2017, 11:04 AM
Updated 07/09/2023, 06:31 AM
UK100
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FCHI
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DE40
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Could weakness in Europe send a concerning message to stock bulls in the states? Yes.

Before getting started let me make this clear, stock markets in Germany, France and London remain in long-term up trends.

The chart below looks at price German and French price patterns have created since the lows in 2011.

DAX (left), CAC

Did a major fake out take place by both of these markets 60 days ago? It's possible.

Both markets broke above 2015 highs a couple of months ago, which looked like upside breakouts were taking place at each (1). Then selling pressure took place and key reversals by both are now in play.

Recent weakness has continued and both markets are breaking rising support at each (2), which was created off the lows that took place at the start of 2016.

If both continue to fall in price at each (2), a domino effect could take place and create selling pressure in the states.

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