DAX affirms recovery rally

Recently I have highlighted the bullishness in US equities. Indices are climbing the proverbial ‘wall of worry’ into new highs. Note: New highs are always bullish signals technically, regardless of the underlying economic indicators.

Interestingly, this bullish sentiment is rippling across asset classes: Bonds, Yen, and gold are down; oil and stocks up.

Even in Europe where the continent’s week-to-week macro data are generally weak, indices are rising too. The German DAX Index, for instance, gapped up recently and is holding on to this bullish pattern. Prices affirmed the long-term trend indicator (see Featured Chart). The near-term target is at 12,500.

Meanwhile, the French CAC Index is now on within striking distance to the 2018 highs. The index crossed above 5,500 just recently, thus completing the entire V-shaped recovery in one impressive run (see below). I highlighted CAC’s bullishness a month back.

Overall, within indices now recovering last year’s losses step by step, it may lure more momentum buyers into risk taking, although I have to say the many rallies are becoming overbought.

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