We shouldn’t be surprised that the relentless selling in Europe has now moved into the “quality” areas of the region. Germany, theoretically the safest place in Europe, had been able to avoid most of the selling taking place in countries like Greece and Italy. But apparently this is no longer the case. Germany is now flirting with some key support levels that should not break if they plan on continuing with this “bull market”.
Today’s chart comes from my pal Jonathan Krinsky over at Miller Tabak:
“Arguably the strongest European index, Germany’s DAX, is currently at the lowest level since mid-December 2012. Price is beneath a 50 DMA that is clearly declining, and the case could be made that it is breaking the neckline of a head and shoulders top. There should be good support at the 7450 level, but losing that implies a fulfillment of the measured move down to the 7050 level.”
(click chart to embiggen)
“It doesn’t get much better for France’s CAC index, which is breaking a nearly 1 year uptrend line today. There should be good horizontal support just below at the 3600 level, but the bigger issue appears to be more of a medium-term topping pattern”
I think he brings up some good points. From a structural perspective, it’s important to note that Germany, “the quality”, is now having trouble avoiding the selling taking place out there, and around the world for that matter. We’ll be watching these support levels, but they look really vulnerable if you ask me.
Tags: $DAX $EWG $EWQ $CAC40