In this past weekend’s newsletter, I reviewed the current fundamental, economic and technical backdrop of the market following the March rebound from the recent lows which was front running the ECB’s monetary policy decision.
“The question, of course, is whether the ECB’s interventions will be able to change the longer-term dynamics in the Eurozone by creating inflationary pressures and sparking economic growth? That answer is likely “no”as it has failed to do so in the past, not only in the Eurozone but also in Japan and the U.S.
In order for the market to change the current negative dynamics, which in turn would warrant a significant increase in long-term equity exposure, it will require a uniform improvement in the technical underpinnings and likely a breakout to all-time highs.“
As shown below, the very short-term technical trend still remains negative as the recent rally pushing into resistance at both the downtrend and the 200-dma. It is also worth noting that the 50-dma is still trading well below the 200-dma as well.
There is a good bit of “stuff” happening in the chart above so let me draw your attention to the more important points.
