German $DAX continues to lead US markets - Market update 6/6/2019

Something I didn't have time to mention in yesterday's update is that the $DAX has been one of my most reliable leading indicators since the Dec swoon.

$DAX up US equities up. $DAX down US equities follow. This won't always be the case, but as long as Europe remains in focus, this is the one to watch. PIIGS are still a factor. Italy remains in a deep bear market. New media would rather blame Trump, but he's not the cause of the panic buying in bond markets.

Getting to the technicals: Based on the $DAX chart below, I can't see how this rally continues.

I'd say we go back and retest support, at the very least.

 

To make things stupid simple:

1. The $DAX bottom came in in Dec.

2. It rallied into a bullish channel.

3. That trend broke along with the 50 day ma.

4. Now we see it back-testing the bottom of that broken channel. This typically doesn't end well.

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