There have been daily-scale compressions in several European indices that are breaking down today. This has produced a strange divergence in which stock markets in those countries that have overt heavy central bank intervention in the form of asset purchases are dropping while those that do not are holding or rising. France and Germany are shown here:
The US and UK picture is quite different, as instead of trending down they are trending up and sideways respectively. There are weekly-scale compressions below here in both that will offer support but in the US case that support is quite far below and US prices are at the top of a very clearly defined range, so there is some down-side risk.
The prudent approach is probably to use this dip to buy the US (we are already long) and maybe the UK (we are also long) but not to buy any Euro-zone indices. We will advise further if we think that this downward break in Europe is an opportunity to sell short but prices must close below these German and French compressions and it is still early in the day.
