MORE SELLING IN EUROPEAN STOCKS SHOULD KEEP DOWNWARD PRESSURE ON U.S. STOCKS
EUROPEAN STOCKS HIT NEW LOWS... More selling in European stocks this morning casts doubt on the staying power of yesterday afternoon's rebound in U.S. stocks. Chart 1, for example, shows the German DAX Composite Index trading lower again today and bearing down on its March low. French stocks are doing even worse. Chart 2 shows the French CAC 40 Index trading at a new 11-month low. U.K. stocks are also tumbling below important support levels. Chart 3 shows the London Financial Times Index (FTSE) falling to a new 2011 low. The correlation coefficient in Chart 3 shows that British stocks have an 86% correlation with the U.S (over the last 20 days). The inability of European stocks to rebound is a bad omen for U.S. stocks.
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Chart 1
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Chart 2
