CAC Continuation The red line annotations on the chart are to demonstrate the fact that the rally from the September low is really a 3 wave move. The value of knowing that is that we know that it was a corrective move and it is countertrend. So for the long term, barring a miracle, the technical picture remains bearish. Currently, temporary support is expected at the 3040 target. The odds favor that level eventually being broken. I can justive a long tern downside target at the MOB at 2500.
DAX Index (unch) Here too, as in the CAC index, the rally off the September low looks like a corrective move. Corrective in that it is composed of 3 waves to the upside. That implies that the true trend is still down. i would expect further weakness in this index even through a close above 6780 would be constructive over the near term. Longer term, the technical picture does not look very healthy,.
DJ EUR Stoxx50 Contn Now that the 2235 Gann line has been tested, I do not believe that it will hold but that we will see lower levels at least test the MOB below 2100. Levels as low at 1800 are readable and possible.
Mini MIB Contn (unch) So far prices have found buyers at the 14300 Gann line. With that support and the fact that prices have gotten themselves in an overextended condition, I expected an upward reaction. Instead all we witnessed was a one week lateral movement which was not enough to get out of the overextended condition. I expect prices to spend some time in the area of the upper MOB and when the overextended condition is relieved, prices should resume the downmove. Most likely we should see the MOB at 11500 tested.
SMI index This index broke below the bottom parameter of the channel . . . and the break was done with a gap. The rally back to the channel may just be a test of the line that was broken. Unless prices can establish above the 6225 Gann line, I believe this rally is just a reaction and that the downmove will resume.
