DBD Strategy Daily - EUROPEAN INDICES REACHING MAJOR SUPPORTS
American indices are still bullish. They closed above major levels yesterday, but for the Nasdaq 100. This could still be a false breakout though. In Europe, it is too early to expect an improvement. Major indices such as the Dax, and in its wake, the Eurostoxx 50, will soon be testing levels that would trigger a medium-term bearish reversal. The signals will become a real problem (followed by fast bearish acceleration) if American indices also break below their major supports. If US indices continue their path undisturbed, European indices will continue sliding slowly, as they have in 2018, with wide counter-trend reactions. This incapacity of European indices to perform in line with the US is -in our view and according to our long-term roadmap- the proof of the deflationary environment that is still threatening our European economy. There is a clear correlation between the under-performance of Europe and the 10-year Atlantic widening spread.
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