We have been more bullish about many stock markets lately and now there are several European markets that have fallen back into areas where we expect to find support. Experienced readers will know that there is an important feature of compression signals – their tendency to act as support or resistance once a break has already occurred. This often gives traders a second chance to capture a price move if the first break was too fast to catch or if the break was too indistinct to be sure of it. Bothe the German MDax and the French CAC40 have broken up from compressions in the last few weeks and are both now ‘sitting’ back on top of those compression areas. This is a chance to buy, so we would do so immediately – the CAC probably being the slightly better bet:
As usual in trades involving compressions, it should be possible to place a much closer protective stop-loss on these new purchases – neither market should push back down through these compressed areas. If they fail to provide the support we expect, we will advise a speedy exit. We will issue the usual 1% stop-loss level in an AlphaMail to follow this edition but will look to issue fresh stop-loss instructions within the next few days.
Our long trade in the Brazilian equity index ‘times-out’ today, with little result but we will probably examine further equity market purchases in the near future to add to the list.
An exception to this bullishness is the equity market situation in China – see our scathing comments in the July 7th edition. We would like to be short but do not have an immediate signal to sell. We watch.
