The German Dax had a breakout (not into all time new highs) but a breakout of a resistance level.
However, we have failed to continue the momentum, and we are getting signs that this is losing steam.
We have created a range/ triple top pattern after multiple higher lows and higher highs. It seems that the uptrend is about to reverse.
Await for the break and close below this support/flip zone before entering.
Again everyone, because of central banks artificially suppressing interest rates, there is nowhere to go for yield except stocks. This will keep stocks buoyed until the party is over. By this I mean right now the central banks are keeping markets propped, but once this confidence crisis begins to manifest people will understand the game is up and central banks will morph into the powerful institution and be buyers of last resort.
I have explained why the US markets will continue to go higher. Not only due to the Fed and people chasing yield, but the fact that the US is still looking better than all western nations even when the US is getting bad economic data! This bad economic data is actually bullish for stocks because it means the Fed is more likely to continue cutting rates which again, means there is nowhere else to go for yield except the stock market.
Also, I have explained why the US Dollar will be going higher, even when the Fed cutting rates is primarily to attempt to weaken the Dollar (because a higher dollar exacerbates all the problems in the world, and is part of Russia and China's Dollar demand attack).
Money will flow to the Dollar in order to buy US Treasuries, which still yield a decent amount and is probably choice number one if you are a fixed income trader. This money rushing into the Dollar will also go to the US markets, which again keeps it buoyed but is all part of the structure and policy the Fed has implemented to force money into the stock market.
This does look like a juicy short, what about possible correlations between the US and German stocks market though? If the Us stockmarket will continue higher, could the german dax follow along?
Uncharted-FX
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@xrphodler99, Yes I mean Global equities are linked due to geopolitical headlines like US-China trade war etc and the fact that stock markets around the world are the only place to go for yield. Part of the reason this trade is appealing is when US stocks broke out into all time new highs, we did not get European equities do the same. Even though all the western nations are stuck in terms of monetary policy, the US still looks the best out of them all. Perhaps we will begin to see this as more money heads into the US. I believe European money is already heading into the US markets, it really is about whether US investors want to put money in Europe and risk losing out on this US equity rush.
xrphodler99
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@Uncharted-FX, great explanation thank you, will monitor this trade for sure.