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Sunday, October 31, 2010

European Index Chart Patterns – 1 year charts

The 5 years European index chart patterns – except Stockholm General and DAX - were struggling around their 50% Fibonacci retracement levels and 200 day EMAs when I looked at them earlier this month.

Things appear to have improved since then – if not in the respective economies, definitely in the stock market sentiments – as the 1 year charts depict below.

Austria ATX Index Chart

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The Austria ATX index chart is above its three rising EMAs, and has made bullish higher tops and bottoms since the Jul ‘10 low. Crossing the Apr ‘10 top will put the bulls back in the driver’s seat.

France CAC 40 Index Chart

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The CAC 40 index chart has been one of the laggards. Despite the wide-scale protests against the austerity measures, the index is showing bullish tendencies as it makes higher tops and bottoms. The RSI is indicating that the going will not be very smooth for the bulls.

Germany DAX Index Chart

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The DAX index chart continues its impressive performance – receiving support from the rising 200 day EMA. The German index has been in a bull market for more than a year, and keeps making new highs – reflecting a stronger economy.

Netherlands AEX General Index Chart

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The AEX General index chart hasn’t been able to make too much headway. It has been trading between 300 and 360 for the past year, but remains above the rising 200 day EMA – the sign of a bull market. The RSI indicates that the current correction may last a little longer.

Oslo All Share Index Chart

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The Oslo All Share index chart has just edged above the Apr ‘10 top and the bull market is expected to gather strength. The lower top on the RSI means there may be speed bumps along the way.

Madrid General Index Chart

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The woes of the Madrid General index chart are far from over. The brief bullish aspirations seem to have been snuffed out by the plummeting RSI. The Spanish index remains the underperformer among the European indices.

Stockholm General Index Chart

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The Stockholm General index chart – the best performer – is facing a bit of headwind after touching the 350 mark. The negative divergence in the RSI may cause a deeper correction. The rising 200 day EMA has provided good support during earlier corrections. There is no immediate threat to the bull market.

Swiss Market Index Chart

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The Swiss Market Index chart is faring marginally better than the Madrid General, but remains an underperformer. For the past 6 months, the 6500 level has provided strong resistance.

UK FTSE 100 Index Chart

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The FTSE 100 index chart made a valiant but unsuccessful effort to get past its Apr ‘10 top. The recently announced austerity measures seem to have dampened the bullish fervour. The RSI has slipped below the 50% level and is showing negative divergence. The bears may tighten their grip. The index is well above the rising 200 day EMA, so there is no immediate threat of a trend change.

Bottomline? The 1 year European index chart patterns are suggesting that the various austerity measures will strengthen the economies in the long run, but will act as a deterrent to faster growth. The gains from the markets are likely to be muted. Time to take a look at emerging market investments?

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