“dear David, until Thursday i remained positive looking at the charts, however i am feeling very uncomfortable with the price action last friday. instead of a small white candle last week all the major charts show a black candle. i see negative divergence and lower tops on rsi and macd. you are always saying the charts will tell us. to me it looks like a serious correction you mentioned earlier could be developing fast. would appreciate you expert opinion best regards”  

David Fuller's view

Thank you for this topical email, although you did not mention which market or markets you were concerned about.  However, I have assumed that you were talking about stock markets, and given your email address, The Netherlands may be at the top of your list. If so, its rangy recovery pattern since June 2012 has become considerably choppier and there was potentially a lower high at yearend 2014. 

There is certainly nothing wrong with your technical antennae, and you may recall me saying that many stock markets were overbought after Christmas, and commencing a reaction and consolidation.  This may be a bigger correction for some, as markets are often emotional and leverage is high, as this service has been pointing out, not least on Wall Street.

However, that would create another buying opportunity as interest rates remain low.  The EU Court of Justice decision mentioned in the lead article above virtually ensures that Mario Draghi will be able to proceed with the approximately 1 trillion Euro quantitative easing program that he advocates, so monetary policy remains accommodative.  Additionally, where deflation is caused by technological innovation, such as lower oil prices, this has a generally positive economic effect.  Lastly, Europe’s valuations are generally competitive, although I would focus on the multinational Autonomies, as previously mentioned.