DAX, CAC and SMI Forecasts – European Indices Working Off Froth

DAX Technical Analysis

The German DAX has been a bit noisy during trading on Tuesday as we tried to rally only to turn around and drop a bit. That being said, the market is a little overextended so I think really at this point in time I think short-term pullbacks will continue to attract attention, especially near the 24,250 level, possibly even the 24,000 level with the 200-day EMA.

CAC Technical Analysis

The French CAC has pulled back just a bit as we’re hanging around the 8,300 euro level. A pullback from here could go looking to the 8,200 euro level and I think there should be quite a bit of support there.

Keep in mind France does tend to lag Germany a little bit; it’s a little bit more sensitive to the luxury sector. As long as we get more risk on behavior, I do think that France can turn things around and eventually go looking to the 8,500 euro level. Right at this point in time, I have no interest in shorting.

SMI Technical Analysis

The Swiss Index, the safety play most of the time, is treading water as well. There are some other names out there that are attracting a little bit of attention, but really, the biggest thing here is the pharmaceuticals and the safety play is still somewhat sideways. That makes a certain amount of sense, as there are so many variables out there that could or may not move the markets, and I think that’s essentially what we’re looking at here in the form of a chart.

People just don’t know what to do with the risk sentiment as the talks between the Iranians and the United States continue. If we start to see a lot of fear out there you could see a flood into some of the safer Swiss names. If not then Switzerland will certainly be the laggard of the three.

We are sitting right at the 13,200 level and just above the 50-day EMA, so I do think this is an area where you expect to see more consolidation. If we break down below the 50-day EMA I wouldn’t short Switzerland; I would actually be looking to play one of the other two indices because the momentum definitely will be over there.

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