A natural law of economics is the following:
+ When Currency Declines, Assets Rise
+ When Currency Increases, Assets Decline
Looking at the Euro(Europe’s Currency) and the DAX (Germany Index). We are presented with some initial clues of what is happening to capital.
As Martin Armstrong States about the DAX rally in March (1 month from today):
The DAX rally is being driven by the collapse in the Euro. As strange as it may seem to say, the DAX has not actually broken out just yet despite what it appears in nominal terms. This is precisely what takes place when a currency declines, which I have been harping about. ALL ASSETS RISE in proportion to the decline in a currency purchasing power. It is NOT inflation; it is the other side of currency collapse.
Personal Record For Understanding Markets:
As of today have a Rally in Euro due to:
+ French Elections
+ People not entirely understanding Currency/Asset laws
+ People not understanding what is happening with the EU
Below is Daily View:
Lets look at Euro in Monthly Perspective:
+ Notice it is lower highs
+ No news have been made in longer term
+ We may have the RALLY this week 4/25, but long term is bearish
So How Does the Asset (DAX) Respond:
As of today (short term), the DAX had a rally:
+ The long term of Euro Bearish
+ Europeans taking money out of banks & putting it into Stock Market (DAX)
+ Smart Money, does not want lower valued currency, so they park it in another asset (DAX)
Look At The DAX In Longer Term (Monthly):
+ Remember, As a Currency Declines… an Asset Will Rise
+ Capital Flows To Different Assets
A Reflection Of Events:
This is for only educational purposes to understand economics for my own personal hobby. By no means make any trades using this information.
So to help one understand what is happening is pretty simple. As the long term out-look for the Euro is bearish. Smart money is taking their cash out of the banks and placing it into assets (the stock market).
Lets see what happens during the French Elections. This should give some moves, but one would need to look at the longer term outlook of the Euro and correlate where capital is flowing.