Europe’s Time to Shine

For the last 10 years, the U.S. stock market has been the belle of the ball. American investors enjoyed an historic rally off the 2009 lows, but European stocks lagged behind. Now, the STOXX Europe 600 may finally be ready to join the party.

For 20 years, the index has struggled with the area near 400. Fresh highs could mark the beginning of a major bull market. Will this finally be the time it can break through? Here’s a closer look.

Prices are now just above the mid-2017 peak. That level was exceeded briefly in early 2018, but the subsequent reversal has taken nearly 2 years to repair. Momentum isn’t showing extreme bullish strength, but looking at price only indicates the STOXX 600 is ready to move higher.

The CAC 40 is confirming the strength out of Europe. After a strong October, the French index is setting multi-year highs.

Like the STOXX 600, momentum is not showing quite as much strength as price, but divergences don’t mean anything until they’re confirmed by a reversal. For now, the CAC 40 is healthy as long as it holds near-term support.

The German DAX is trying to resolve higher, too, despite weak economic data.

This group has rallied back above the 2015 peak, and now sits within a few percent of a record. The area near 12300 should act as support on any pullback, but Europe bulls want to see a break above 13700 for confirmation.

The FTSE 100 is in a similar place, though it underperformed during the most recent run-up.

The 2015 highs are key support for this Brexit-affected index. Falling below could do serious damage to the broader European index. On the other hand, breaking above the 4-month downtrend would be a sign of resilience, and could spark a rally back to the high-end of the 3-year range.

If new highs are contagious and spread from the France to Germany and the U.K., the whole of Europe could be headed much higher.

Nothing in this post or on this site is intended as a recommendation or an offer to buy or sell securities. Posts are meant for informational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in posts. Please see my Disclosure page for more information.

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