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European Stocks: Five-Wave Moves Speak Volumes
It's no secret that summer months are rarely favorable for stock investors.
"Let me highlight for you recent developments in the patterns of European stock indexes that suggest their future course.
"While some rallied sharply [in May], other European stock indexes faltered and struggled…The diversity of performance and pattern suggested that the rebound from oversold extremes that started in March was ending. The sharp fall of stocks since mid-May now suggests that the trend has turned down."
That's a quote from European Stocks Analyst Tom Denham in last month's June issue of Elliott Wave International's European Financial Forecast.
And here is the latest chart of Germany's DAX, Europe's benchmark stock index. The red circle approximates the timing of the forecast you've read above:
It's no secret that summer months are rarely favorable for stock investors. ("Sell in May and go away," remember?) What complicates things now, however, is the ongoing liquidity crisis that has plagued the markets for almost a year now. And while some analysts out there keep saying "the worst is over," others are not so optimistic.
What does Elliott wave analysis show for European stocks in the weeks ahead?
In the chart, look close at the structure of the DAX's decline in June. If you're familiar with the Wave Principle, you should be able to see five distinct legs within that move: three down and two up. Under Elliott, five-wave moves are called impulses, and by definition, they always point in the direction of the larger trend.
However, even if Europe's stocks are destined to fall some more, no market ever moves in a straight line; rallies are inevitable. When and where might they occur, and how high may they go? The new, July European Financial Forecast gives you those answers for the following markets:
- Germany's DAX stock index
- Britain's FTSE-100
- France's CAC40.
- The Netherlands' AEX
- Switzerland's SMI
- Spain's IBEX 35
- Italy's MIB 30
- Dow Jones Euro Stoxx 50
- Russia's RTS
- Eastern Europe's CECE Overall Traded Index: Hungary, Poland, Czech and Slovakia.
- PLUS, Special Study: Gran Scala, a European Las Vegas in a Spanish desert, may prove to be a huge scandal. Read the details in this Special Study.