Eurostoxx 50 Forecast Today - 03/09: Rally Continues (Chart)
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It's easy to see that this asset has plenty of support as we initially fell to kick off the Monday trading session, only to turn around and show buyers again. Keep in mind this is a great way to play the entire European Union, and it certainly looks as if traders believe that equity prices are going higher.
A lot of this comes from the idea that the European Central
bank will continue to support asset pricing be cheap money, because quite frankly the European economies are on the whole, struggling. If that's going to be the case, it makes a lot of sense that traders will go back to the same playbook, looking for liquidity to gamble with. This is a phenomenon that we have seen since the Great Financial Crisis, over the last 14 years or so. Bad news is actually good news for the stock market, and the underlying economy doesn't really matter, unless of course it means that the central bank is going to flood the economy with cheap money. In that scenario, stocks tend to be a winner, at least until there are serious concerns.
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Looking at the chart, the only thing you can take away from it is that traders seem to be buying the dip. The 50-Day EMA is near the €4850 level, and I think that's an area that probably makes a lot of sense as significant support. It's also worth noting that initially on Monday, the market plunged, only to turn around and snap right back. It looks like we are trying to do everything we can to get to the €5000 level and breaking above that level of course would be a major psychological victory, and probably send this market looking toward the €5150 level again.
It's almost impossible to short stocks in this environment, at least not until people start to think that the central banks are behind the curve when it comes to inflation and economic weakness. I can tell you as somebody who lives in the United States, the almost certainly are but also at this point in time, it looks like Wall Street is willing to overlook that. I suspect that equities traders on the continent are doing the same thing.
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