DAX

Dax has risen in 3 waves and given up yesterday. What might have happened is a wave ii bounce and wave iii down could be next. This could mean that the 5th wave ended at the highs in November. What is more is that European markets appear inversely correlated to the Euro. Very different to 2011, when a falling euro was associated with money leaving the Eurozone on fears of a debt default. Following the Greek bailout and the ECB bond program, the relationship slowly inverted and now QE=weak Euro is bullish stocks and so the recent rally in the Euro is not helping as you can see on this chart. This then is very similar to what we witness in Japan where a rising JPY is bearish Nikkei. In short bearish dollar = bearish stocks = bullish commodities = stagflation next year.