The Traders outlook today
EUROPEAN OUTLOOK
07.50
I do prefer the look of the DAX to the FTSE right now, as indeed I have done for much of 2012. Not only does it have a more attractive uptrend on its price-chart, though, but the fundamentals seem better as well. If Germany’s judges do not block the ECB from engaging in more aggressive monetary policy this week, I would expect the DAX to be one of the leading beneficiaries of the easing of the European sovereign-debt crisis.
I do not see a compelling case for a near-term top in the German index, despite its propensity towards weakness in September (the average return since the ‘50s is negative 3%). Below, I show the DAX’s summer rally in the context of its Raff regression channel. Tops have tended to come at or around the upper limit of the channel, a level that the index is still some way off reaching.
I continue to look to buy rallies in the DAX, as well as in FTSE and EURGBP