The European financial markets seem to have entered a limbo stage, as the uncertainty about Greece just won’t end. So, I guess it’s time to look at the technical charts and see if they’re telling us something.
“What’s clearly evident is that the volatility in stocks are decreasing, but rising sharply in the currency markets.”
There’s been signs of a top in making in the international stock markets. Some analyst have warned of a mild correction of about 4 to 5 percent. But we’ve heard that one before, and the market have just kept on going. It seems to be more true in the U.S. than in Europe, thou. The European markets are – just like Europe itself – much more diversified.
The Greek tragedy has turned in to a day time soap opera for most Europeans, as the political leaders still are still fumbling with a sustainable solution.
For investors it ought to be an excellent chance for reconciliation and perhaps a little restructuring of ones portfolio.
So, what’s moving where?
Let’s take a look at some basic charts.
First the stock market, using the German DAX as a point of origin.
The Relative Strength Index (14) is still in a rising trend we see in this chart for the last two months.
And it still have a bit to go before the RSI is overbought and a downward reaction can be expected.
Amongst the investors, there’s also a significant overweight of optimists that believe the market will go higher.
As shown in the chart below, the bull forces (green) are still stronger than the bear force (red):
There’s still a lot of aggressive sellers out there, and investors with solid appetite for risks, the On-balance Indicator shows:
What’s worth making a note of, is the fact that the European stock market is trading in a more and more narrow trading range.
Using the Momentum Indicator, it looks like this:
This can be seen as a confirmation of the suggestion that the market is “topping out”, but can also be a sign of investors putting their equity positions on hold as they wait for some kind of development related to the Greek crisis.
What is more probable, is that the big money is not to be made in stocks over the next weeks (unless something unexpected happens).
So let’s turn to the currencies.
Volatility Spike In Forex
Using the Momentum Indicator on EUR/USD, we get a total opposite picture.
What’s clearly evident is that the volatility in stocks are decreasing, but rising sharply in the currency markets.
So, if you are a swing trader, I guess the Forex is the best place to be right now.
However, the problem with EUR/USD is that the number of trades are falling sharply, too, the On-balance Indicator shows.
This indicates a flight into other currency combination.
But the RSI for EUR/USD can be worth taking a closer look at.
The index seem to have entered a negative trend at the beginning of the month, and recently tumbled through the floor of 30 pts, witch in turn triggered a reaction up.
The question here is; will this upward reaction last for a few days more?
Or will the euro continue it’s slow slide?
You’ll have to choose that bet for yourself.
Turning to back to stocks, and to the Nordic markets.
“OMX Stockholm 30 Index has broken through the roof of the rising trend channel. This signals an even stronger growth rate. The index has support at around 976 points. RSI diverges negative towards the prices. This indicates a risk of a reaction down. The index is considered overall technical positive on medium term,” Investtech’s analysts concludes.
Over to Norway, and the OSEBX at Oslo Stock Exchange.
“The benchmark index is in a rising trend, and further expansion within this trading range is indicated. The index has marginally broken through resistance at about 384 points. An established breakthrough will indicate a further rise. The index is considered technically positive in the medium term.”
When it comes down to picking one single stock, Investtech’s choice number one is the shipping company Golden Ocean (GOGL).
The analysts writes:
“Golden Ocean Group Limited is in a rising trend and a continued positive development are indicated. The share price has broken through a resistance level and given a buy-signal from long-term trading range. The stock has support at about NOK 9,40. Volume tops and bottoms corresponds well with the tops and bottoms in the price. Volume balance is also positive, which strengthens the positive trend picture. The stock is considered overall technical positive on medium term.”
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