Eurostoxx 50

Round Up

Published 9th November 2017 & validated 18th December 2017

We see the Eurostoxx 50 index in a secular bull market. Despite short term corrections we are bullish mid and long term on European stocks. However, we believe that the current correction will continue further and bring lower levels days ahead.

Market Pulse

Published 18th December 2017

The main question is now if we see another spike to the downside or not. Our base case favors another spike to the downside. Nevertheless, we should not forget that the higher degree trend is up. Therefore we should be ready for surprises to the upside!

We’ve showed the case for a triangle in the past few updates on this page. It is still valid and our base case. However, we could imagine wave-b to play out also as a flat. This is depicted in the graph above in blue.

The red case is the Santa Claus rally. It would be a bit of a surprise given the impulsive look of the downleg from November 1st, the extended fifth wave of impulse wave (i), and the two leading diagonals from November 15th to the upside. We need to see a correlated rally across major Europan indices to give this case more credibility.

Short Term

Published 16th November 2017 & amended 18th December 2017

The Eurostoxx 50 index shows an extended 5th wave of minute degree for the August 2017-November 2017 swing. Elliott’s guidelines call for strong corrections following extended 5th waves. We’d therefore expect more followthrough to the downside.

We should be aware of a not negligible alternative scenario where wave 1 already finished on November 1st. This would call a bigger drop as we project in our base case. It is depicted by the blue alternative count in the chart below. Momentum indicators such as macd could give an early signal if the black count plays out. We currently favor the black version. Our argument for this comes from a look across markets. The general picture world wide looks rather like a rally into year end.

Medium Term

Published October 10th and validated 18th December 2017

The Eurostoxx 50 is hugging a 17y downward trendline. This picture is similar to other European indices such as CAC40 and IBEX35. A confirmed breakout situation of all three indices would be a strong bullish signal.

Our expectation is that wave iv° is completed due to its alternative look to wave ii°. Wave v° should take the index close to the 4000 points region to complete minor wave 1. Around region we see technical resistance as well as wave relationships between wave v° and wave i°.

Moreover a 17y lasting trendline seems so significant that the subsequent minor wave 2 should bring price levels again to this trendline before a breakout confirmation begins. In sum this would look like a sideways pattern from the test of the 17y line in April 2017. However the subsequent breakout should be very strong and quickly bring the Eurostoxx 50 closer to its all time high.

There is a difference to the cycle wave IV in the Eurostoxx 50 to other European indices such as Dax and CAC40 if our analysis is correct. The medium term wave structure looks in the Eurostoxx 50 like a zig zag in cycle wave IV as opposed to contracting triangles in the Dax and CAC 40. This would mean that the European index is a bit ahead in terms of wave structure.

Technical Analysis