Have European Indices Finally Run Out of Steam?

<p>Global stock markets have had one of the best starts to the year since the 2008 financial crisis. While US indices hover around their all-time highs, only a handful of European indices are close to their all-time highs, and some are still quite a way off. This market divergence is now signalling some interesting trading opportunities as we discuss further on.</p><p><a href=”https://admiralmarkets.com/analytics/traders-blog/european-indices-losing-steam”><img style=”width:auto;” class=”img-responsive” src=”https://fxmedia.s3.amazonaws.com/articles/remote/6a7a188fa5e778091d714189d8f1db67.jpeg” style=”” alt=”Have European Indices Finally Run Out of Steam?” rel=””></a></p><p><br></p>
<h2>European Stock Indices: A Mixed Affair</h2><p>In the current market, it certainly seems as though not all European <a href=”https://admiralmarkets.com/products/indices”>indices</a> are equal. The AEX25 and CAC40 are both trading near record highs while the DAX30 and FTSE100 remain quite some distance away from, albeit still moving in that direction. This warrants paying further attention to the markets that are leading the way in Europe such as the Dutch AEX25 stock market index.</p><p><br></p>
<h3>Trading the AEX25: The Technical Picture</h3><p><a href=”https://admiralmarkets.com/analytics/traders-blog/european-indices-losing-steam”><img style=”width:auto;” class=”img-responsive” src=”https://fxmedia.s3.amazonaws.com/articles/remote/9506b4a9ed5ef93b0c6ffb61cf187605.png” style=”” alt=”AEX25 daily chart” rel=””></a></p><p><em>Source: Admiral Markets </em><a href=”https://admiralmarkets.com/trading-platforms/metatrader-se”><em>MT5 Supreme Edition</em></a><em>, </em><a href=”https://admiralmarkets.com/start-trading/contract-specifications/instrument/aex25″><em>AEX25</em></a><em>, Weekly – Data range: from November 21, 2010, to April 29, 2019, accessed on April 29, 2019, at 9:26 pm BST. – Please note: Past performance is not a reliable indicator of future results. </em></p><p><em><br></em></p>
<p>It’s clear to see the historic uptrend in the AEX25. While some traders have benefitted from prior bounces off the long term ascending <a href=”https://admiralmarkets.com/education/articles/forex-strategy/support-and-resistance-indicators-with-a-trading-strategy”>trend line</a>, the market is now approaching its previous record high levels – levels where the market has failed before. </p><p>While it may be too early to initiate short positions, the risk-reward opportunities at these previous highs are becoming less favourable for long positions – unless the market can break to the upside. Therefore, the question on every traders’ mind is whether or not the market can break to new highs?</p><p><br></p>
<h3>Trading the AEX25: The Seasonal &amp; Statistical Picture</h3><p>In identifying whether the index can break to new highs, a historical study of the monthly performance of the AEX25 could prove useful:</p><p><a href=”https://admiralmarkets.com/analytics/traders-blog/european-indices-losing-steam”><img style=”width:auto;” class=”img-responsive” src=”https://fxmedia.s3.amazonaws.com/articles/remote/bc1cc284925967096996c4b4de01c538.png” style=”” alt=”Months chart” rel=””></a></p><p><em>Percentage Of Months Closing Higher Than The Open, 2000 – 2018</em></p><p><em><br></em></p>
<p>The statistical analysis above shows the percentage of months which closed higher from where it opened since the year 2000. It is evident to see that the period from October to April tends to have the best performing months, on average. Seasonal weakness is evident in May and June with only a 47% and 37% chance of the months closing higher respectively. </p><p>It’s important to remember that seasonal and statistical studies, such as above, only provide probable outcomes – not certain ones. However, by combining this level of analysis with technical and fundamental analysis the trader can start to increase their edge in the market, before making a trading decision. </p><p><br></p>
<h2>European Indices: The Fundamental Picture</h2><p>While most European stock indices are in bullish trends, the magnitude of the moves higher has differed wildly. But, there is still some correlation between the major European indexes such as the AEX25, CAC40, DAX30 and FTSE100. </p><p>Both May and June tend to be weaker months for global stock markets as traders observe the ‘sell in May and go away’ phenomenon which represents the tendency – not the certainty – that stock markets decline during these months (as the seasonal and statistical analysis of the AEX25 above shows). </p><p>As a number of the stronger European indices are approaching resistance levels, traders will be paying close attention to what happens in May – both technically and fundamentally. Upcoming European elections and ongoing US trade tariff talk are just a few of the major events to keep on eye on this month which could influence European indices and result in some interesting trading opportunities for both short-term and long-term traders. </p><p><br></p>
<h2>Conclusion</h2><p>Trading against the overall market direction is no easy task. However, in some situations, it may benefit to do so. Ultimately, experience and <a href=”https://admiralmarkets.com/education/risk-management”>risk management</a> will play a big part in deciding how to trade such situations. One of the best ways to build experience and practice risk management techniques is through using a <a href=”https://admiralmarkets.com/start-trading/forex-demo”>demo trading account</a> – allowing you to trade, test and tweak your strategies in a risk-free environment. </p><p>Furthermore, Admiral Markets has recently added seven more stock market indices to its CFD offering. You can now trade 19 global stock market indices with our upgraded <a href=”https://admiralmarkets.com/trading-platforms/metatrader-5″>MetaTrader 5</a> platform giving you the best instruments and trading platform to trade on the world’s financial markets.</p><p><br></p>
<h2>Investing in Forex with Admiral Markets</h2><p>Admiral Markets offers professional traders the ability to trade with a custom, upgraded version of MetaTrader 5, allowing you to experience trading at a significantly higher, more rewarding level. Experience benefits such as the addition of the Market Heat Map, so you can compare various currency pairs to see which ones might be lucrative investments, access real-time trading data, and so much more. Click the banner below to start your FREE download of MT5 Supreme Edition!</p><p><a href=”https://admiralmarkets.com/trading-platforms/metatrader-5″><a href=”https://admiralmarkets.com/analytics/traders-blog/european-indices-losing-steam”><img alt=”Download MetaTrader 5 and begin trading today!” style=”width:auto;” class=”img-responsive” src=”https://fxmedia.s3.amazonaws.com/articles/remote/2a2e60705757790c63ecf73b56599a4e.png” style=”” rel=””></a></a></p><p><em>Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter “Analysis”) published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:</em></p><ol><li>This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.</li><li>Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.</li><li>Each of the Analysis is prepared by an independent analyst (Jitan Solanki, Professional Trader and Analyst, hereinafter “Author”) based on the Author’s personal estimations.</li><li>To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.</li><li>Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.</li><li>The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.</li><li>Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.</li><li>The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.</li><li>Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the <a href=”https://admiralmarkets.com/risk-disclosure”>risks</a>.</li></ol>