Global stock markets achieved new highs during July and continue to grind ever higher as the only game in town for investors. However, the rate of increase has slowed and with the end of the earnings season and August upon us investors may be looking to realise some profits and square positions for the holiday month.
A scan of the equity markets (we are already SHORT UK100 from July 14) highlighted the GER30. A failure to break 10,400, pressure on the key banking and automotive sectors and persistently flat PMI figures has seen two big down days on the key German equity market. The misalignment of the moving averages suggests that we are at best in a consolidation phase. My preference would be for a short position if the 200 DMA was breached and broken significantly on the daily time frame. This would mean a clear close below 10,077 which would generate Target 1 at 9960 and Target 2 9782.
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