Euro Crisis No. 2?
Alexandros Yfantis | Feb 27, 2013 05:32AM ET
Our bearish signals are proving correct as days pass by. Despite early optimism regarding the Italian elections, the inability to form a government has brought fear and uncertainty back to Europe. All major indices, despite the Monday morning rally, have pulled back and today are testing or moving past their recent lows. Our view was that the pattern of the initial declines that started late January, was to be followed by an upward correction and then another violent downward move. Some indices managed to make marginally higher highs late February, but at the same day prices snapped back down after the disappointing election results.
Lets take a look at those important indices.
DAX:
DAX is currently testing the support zone we show in the chart below. Although it reached close to the January highs, it pulled back down violently. A break below 7560 could accelerate the decline.
IBEX:
IBEX reached the 61,8% retracement as expected by our analysis for the end of the upward correction and now trades just above the support zone at 8000-7950. Breaking below this level will accelerate the fall.
MIB:
The Italian index has broken the lows and is expected to fall even further.
CAC:
The French index has very ugly daily candlesticks. It has tested January highs and sharply fell back down. A break below 3600 will accelerate selling pressures.
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