Background
On Friday ahead of the US Non-Farm Payroll I had suggested that if European equities declined further during that afternoon session I would step into the market.
The main European indices did not decline, they actually picked up some ground to close with reduced losses. Needless to say, I did not acquire any averaging position. Nor did I react yesterday as Mondays can be notoriously volatile especially after the payroll and when one throws Greece into the mix, the conditions can tend toward combustible.
That said I am looking at the slide this morning with some interest. European stocks are little changed in choppy trade on Tuesday. Investors remain cautious after a rally in German 10-year bund yields and as concerns over Greek negotiations persist. So why am I circling the European equity market?
I am looking at the US equity markets futures which point to a steady open. The Dow Jones Industrial Average futures pointed to a 0.08% uptick, S&P 500 futures signalled a 0.09% gain, while the Nasdaq 100 futures indicated a 0.06% rise.
Using an indexed form of the DAX, CAC 40 and FTSEMIB (ignore IBEX for now) I have looked at the DAX as my proxy.
The index was set at 100 at end of 2011 and last week settled at 189.84. The European market structure is sound unless there is a retracement back to the levels last seen on February 6th 2015 when the DAX was at 10840. I am quite comfortable about the outlook at the moment.
Management and risk:
I am setting the following targets at which I will buy further exposure to Europe:
I am not running stop losses at the moment as these positions are core/strategic and would be added to current exposure levels…
DAX 10584…CAC 40 4626…FTSE MIB 20490