European Stocks’ Outlook For 2018

European stock markets have an amazing setup hence our bullish European stocks outlook for 2018.

There is a lot of talk in financial media about the outlook of Europe. Of course stories sell well once they are ‘gloomy-and-doom-y’. But this has no value at all for investors.

Moreover, the more financial media stories investors read the worse it is because there is always a bullish version and always a bearish version somewhere to find. Smart investors turn this small set of relevant data points and charts, rather than reading one article after another.

Case in point:

Go figure.

European stock market outlook 2018 – what really matters

During summer time we sent out this alert to our subscribers: Alert – European Markets Start Trending. That is exactly the point in time when a tactical fall got broken to the upside.

Our point of view was simple: German interest rates are a leading indicator for European stocks. That is what we are watching in 2018. The long term German interest rates chart shows a retracement now after a very strong breakout. The 0.30 points level in 10-year German yields is an important one to watch. If this provides the support it shows on the chart then we would become very bullish in European stocks in 2018. Especially banking stocks in Europe will be outperformers.

In case European interest rates go lower from here, we see European stocks struggling in 2018.

The long term Eurostoxx 600 chart has an amazing setup. A triple top over the last 10 years got tested this year, even twice. There are two things about this pattern.

First, this very long term triangle pattern is incredibly powerful. Markets are moving to the apex of the triangle. A strong move will result any time soon.