US still fragile, Europe solid

Wall Street traders

US markets continue to show signs of weakness, with no clear trend. However, it’s still premature to talk about a second wave of correction – even less so about a crash:

1. US indices are holding above important support levels, and the  200-day moving average is still upwards-sloping

2. In a crash or a downside correction, everything goes down. Right now, weakness seems rather isolated to the US where valuations are richer and rates are going up

European stock markets, on the other hand, have been at their highest level in two months. This has been helped by the euro weakness, but is probably also due to portfolio rotation from sales of US stocks – proof that investors do not completely flee the stock market.

Euro Stoxx 50 Daily – the index broke above its 200-day moving average on bullish momentum, and could be heading for the highs at 3700.

SP500 Daily – a break under the horizontal consolidation triangle and under 2580 support would be a big warning signs for the bulls. On the other hand, a move above 2720 would pave the way for a bigger rise.

NASDAQ Daily – a break under the triangle and below the 200-day moving average around 6400 would be a first warning. Below 6300, the market would probably move to a bearish trend.

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