The following is a brief excerpt from Monday’s (January 12th) Keys To this Week report, one of 8 different reports that we produce for clients at various intervals throughout the month.
While the financial media and many analysts seem to be focused — if not obsessed — on oil prices’ effect on US equity prices, we have been more keenly focused on European equity prices as global investors contemplate the introduction of quantitative easing by the European Central Bank (ECB).
Key #4 of 10 “keys” to US stock market direction listed in Monday’s report highlighted a potentially bullish breakout emerging in the German DAX Index, which we viewed as a potential leading indication of upcoming US market direction following 5 weeks of sideways trade.
The DAX broke out higher overnight in Europe and, as expected, the S&P 500 has subsequently risen by as much as 29 points thus far today.
Research Report: Keys To This Week
Date: January 12th, 2015
Topic: The US Stock Market
Key # 4 of 10> Intermarket Relationships: German DAX Index. TURNING NEAR TERM BULLISH? The blue highlights in Chart 3 below show that the DAX begins this week in the midst of a 5-week period of sideways investor indecision follow a strong advance from the mid October lows. Most of the time these patterns resolve themselves by resuming the bullish trend that preceded them which, in this case, would be confirmed by a sustained rise above the upper boundary at 9843 — which would then target an additional 8% rise. Considering the tight and stable long term positive correlation between the DAX and S&P 500, we will view the resolution of this pattern as an indirect indication of upcoming US market direction.
This morning’s report is a good example of the kind of forward looking investment research that we have been providing Asbury Research subscribers with for the past 10 years.
Asbury Research subscribers can view Monday’s report in its entirety by logging into our Research Center.
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