Research Excerpts

Right Now, Europe Is Driving The Bus

Posted on: Friday, September 16th, 2011

I just returned from a 3-day trip to the Northeast.  In between client visits I had the opportunity to speak at the September meeting of the Boston Chapter of the Market Technician’s Association, which was held on the trading floor of State Street Global Markets in Boston.

The following is one of the 25 charts from my presentation, which was taken from our September 8th US Financial Market Chart Book.  Subscribers can log into our Research Center (via the button at the top right edge of the screen) to view it.

We have been particularly interested in European equities over the past several months due to the downward pressure that European  sovereign debt issues have been exerting on the US market — which has resulted in the German DAX underperforming the SPX by a whopping 23% since June 22nd.

The chart shows that, as of our August 8th report, the DAX was positioned right on top of major support at 5178 to 5125 — which we considered to be a key inflection point for the DAX  from which its larger March 2009 advance should resume — if it was still intact.

Just this week (since Monday August 12th) the DAX has already aggressively rebounded from that support by 690 points or +14%.  Meanwhile, the positively-correlated S&P 500 has coincidentally risen by 84 points or +7%.

This is a good example of how understanding intermarket relationships, which is a big part of our analytical process, can often identify investment opportunities that might otherwise go unnoticed.

 Professional investors can learn more about our investment research right here on our website which includes sample reports, client testimonials, our 2010 market calls, and John Kosar’s recent appearances in the media.

Call us at 224-569-4122 for additional information, or to begin your access to our research.