Several times Germany has been a leading indicator in bull and bear moves, ahead of what take place in the S&P 500. Below looks that the DAX index over the past decade and the important pattern that could be in play.
DAX hit the top of 6-year rising channel (A) back in 2015, then proceeded to decline to the bottom rising channel (A) 14-months ago. The rally off the 2016 lows, now has the DAX testing 2015 highs at (1), which comes into play as resistance.
A bearish rising wedge look to have formed over the past year, as support is now being tested at (2). If support would five way, it would increase the potential the DAX has created a double top.
Bull in the states want/need to see the DAX breakout at (1). The bullish case for stocks in the states should start to get a little concerned if support breaks at (2), going into the “Sell In May” time frame.
On the ETF side of things, the iShares MSCI Germany Index Fund ETF (NYSE:EWG) was trading at $28.23 per share on Tuesday morning, down $0.05 (-0.18%). Year-to-date, EWG has gained 6.61%, versus a 4.68% rise in the benchmark S&P 500 index during the same period.
This article is brought to you courtesy of Kimble Charting Solutions.