All the Euro STOXX Indexes are at new all-time highs.
The DAX is at new all-time highs.
Germany is about to break out of a massive base in USD terms.
Spain and Greece are completing multi-decade bases.
European equities are on absolute fire right now and participation is broad.
Meanwhile, they are still talking about the recession in the Eurozone.
It’s a perfect setup. In fact, the bull thesis here is a lot like China in a sense that many of these countries check all three boxes… sentiment, technicals, and valuation.
Some of these European countries like Poland and Austria are even cheaper than China with CAPE ratios around 10x.
They also come with plenty of beta. For example, the MSCI Poland ETF EPOL is already up about 150% off its 2022 cycle low.
This kind of action says a lot about risk appetite, too. This is true for some areas of Europe more than others.
Here are fresh base breakouts in two charts that I always check on when assessing risk-on behavior over the pond.
European financials and Italy are completing financial crisis bases and making fresh multi-decade highs.
What could be more bullish?
European financials were some of the sector culprits from the 2008 crash. They are finally repairing that damage and filling a huge memory gap.
And Italy is one of the “PIIGS” which is a derogatory acronym used for a handful of countries that struggled during the European debt crisis all those years ago.
None of that is important today. What matters is that these former crisis indexes are flashing textbook buy signals. And this isn’t just any pattern.
This kind of structural rounding bottom reversal is as good as it gets for longer timeframes. I want to buy these bases every time I see them.
From a more macro perspective, it is incredibly constructive to see breadth improve and expand across the globe like this.
We’re talking about China. We’re talking about South American countries like Peru, Argentina, and Colombia. And now we’re talking about the breakouts in Europe.
It’s just about all working around the world right now. It’s as good as global market internals have looked in a long time. And it’s all very bullish.
We’ve been putting on a growing number of international trades in our Breakout Multiplier system lately and they’ve been working. We are selling quick doubles and redeploying the capital into fresh ideas. I have a feeling we’ll be doing a lot more of it in the future.
