Is Germany about to send a very important price message to stocks in the states? This pattern would suggest it is!
This chart looks at the DAX index from Germany over the past 7-years.
As mentioned in the chart above, the DAX has spent the majority of the past 3-years inside of channel (1). It created the top of this channel as it was double topping in late 2017/early 2018.
The rally over the past year has the DAX testing the top of the channel at (2).
In my humble opinion, the DAX is about to send a very important message to stocks in the states.
If the DAX peaks at the top of this channel and starts turning weak, it will send a negative message to stocks in the states.
If the DAX breaks above this channel and the 2017 highs, it would send an encouraging message to stocks in the states.
Investors in Germany, Europe, and the States should keep a very close eye on what the DAX does over the next few weeks.