European stocks buoyant; Major breakout in CAC?

One of the market principles is that once a trend is in motion, it is likely to continue.

Over the past few months, stock markets around the world have staged a huge rebound. Many stocks hit new all-time highs. Leading this upward charge is the US. The runaway trend there is dragging all other markets higher, including China and other emerging markets.

In Europe, this bull trend is evident across major bourses. The German DAX Index, for example, hit new 2019 highs. The near-term target is at 12,500 (round number target).

More interesting is the French CAC Index, which is trading near the massive range resistance near 5,600 (see below). A break of this ceiling would bring new cyclical bull market highs – and a major push towards the psychological mark at 6,000.

Overall, stocks have continued to propel upwards despite their overbought technicals and massive gains this year. So some defensive precautions may be warranted, such as long volatility or bond positions.

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