The current market environment invites you to pause and carefully observe the development of stock markets which are trading – regardless of their geographical location – near key levels. An attitude that, as reflected in the latest episode of the Investment Strategy podcast, will be essential to identify the moment when it is most advisable to buy again on the stock market “with more energy”.
So it’s time to monitor those little details in some of the key indices, both in Europe and the United States, that provide the necessary clues to be able to operate with more certainty. In this sense, on the Old Continent, it is appropriate to follow the evolution of the German Dax 40. The German selective is trading close to the support of the 18,900 pointswhich, if breached, would anticipate a further 5% decline before the bulls attempt to regain control.
“You are about to confirm a downtrend in the shape of a head and shoulders that would open the door to a fall”, warns the Ecotrader analyst in the podcast. This fact, added to the fact that the Ibex 35 abandons short-term positions and, in fact, I could look for the worst case 10,900/11,000 points accentuate the threat of greater consolidation of the European equity market.
Of course, the loss of support for the DAX 40 and the additional drop of 4% that would follow would represent a magnificent redemption opportunity on the European stock market with a much more attractive return/risk equation than a few weeks ago. “If we have this fall, it is likely that we will have Christmas rally” says Cabrero.
“A clearer operational scenario would open up to take advantage of a possible bullish final part of the year, in the form of an end-of-year rally, but for now, let’s remain patient and wait to see if the market grants it to us. Christmas presentin which case I may recommend that you buy stocks again with more energy.
