Launch VideoEuropean Stocks Find Resistance as Summer Momentum Wanes
European stocks are now finding technical resistance following a surge that began earlier this summer. In the Aug. 29 edition of Technical Strategies {NSN M9J7IX6JIJV6<GO>} Paul Ciana noted that statistically the month of September brings with it a propensity for market declines and increased volatility. A number of technical observations suggest the Euro STOXX 50 index may face a test as summer draws to a close.
The EURO STOXX 50 Index is now within a resistance zone between 2565 and just above 2600 that is related to previous highs. There are two technical signs that suggest the Sept. 12 high was particularly important. First, as the chart at right shows, it was achieved on a bearish divergence with the MLR Slope (orange line in lower panel), which measures the gradient of moving linear regression. This indicates a loss of momentum in the upward trend.
