There were compressions in Dax and Eurostoxx yesterday. So far today these are both breaking upward:
This opens the door to further strength in stocks generally, but particularly in the N European markets that would most benefit from the widely anticipated ‘Euro QE’ that we may or may not see beginning later in the month. If these two indices are still trading above yesterday’s compressed levels near the close today, buy them. We already have an outstanding recommendation to be long of the Dax from the 12th December HEDlines, refreshed by the January 7th advice and this new signal (if confirmed by continued strength today) would extend the life of that Dax long position yet again. The same is true of US longs established in that same 7th January advice – although most of the strength is in Europe today, this should keep the growing upward momentum going in US equities too.
Elsewhere there have been more signs of bottoming in currency pairs involving the $ – this time the £/$ at both daily and weekly scales and a top extension in the $ index:
This lends weight to the ‘long Euro’ advice that we gave in that same January 7th edition and additional $ index sales/£ purchases can now be made.
