We advised buying German stock indices in the Friday 13th edition and that trade has worked well. The reason for the recommendation was some bottom extensions in Switzerland, Holland and (later) Austria -here is an update:
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We always have a preference for buying Germany whenever there is a reason to buy any European equity market for reasons often stated here – the Euro works most in favour of Germany.
Germany has indeed rallied more than the markets that provided the signals but there is a reason to be nervous – there was a weekly-scale top extension in Germany itself 3 weeks ago, that coincided with the top of the market rise:
This signal shows us that prices will have great difficulkty in sustaining any strength for months to come and so this should be considered a ‘last gasp’ rally.
Be very careful with long positions here and consider taking profits very soon. The market may continue upward a while longer – that compression in the MDAX may provide further impetus – but this is a conflicted situation and so it may be better to jump out sooner rather than later.
More soon.
RE
