Don't Ignore This Chart!

Italian and German Indexes Battle Different Sides of Key Moving Average


The chart below shows year-to-date price action for the Milan Index ($MIB) and German DAX Index ($DAX). Note that the MIB is down around 22% year-to-date and the DAX is down around 2% since January. In contrast, the S&P 500 is up around 6% so far this year. The next directional move for European stocks could hinge on these two indexes. The Milan Index is in a downtrend overall and just below the 200-day SMA. The highs extending back to August mark resistance in the 17000-17500 area and a breakout here is needed to reverse the downtrend. Such a move would be quite bullish for Italian stocks and this would also benefit Europe. 

The bottom window shows the German Index trading above the 200-day SMA since late July. Notice how the DAX established support in the 10200 area with lows in September and November. The rising 200-day SMA is also in this zone. I am inclined to add a buffer and mark support in the 10000-10200 area. The overall trend is up as long as this zone holds. A break below 10000 would reverse this uptrend and be bearish for German stocks - and European stocks. Thus, we have two indexes representing two of the biggest economies in Europe. Both stalled since August and both have clear support/resistance zones to watch. Upside breaks in both would be bullish, while downside breaks in both would be bearish.  

Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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