Euro Stoxx 50, UK FTSE 100 – Price Outlook:
- 92% of the members in the Euro Stoxx 50 index are above their respective 250-DMAs.
- 91% of the members in the UK FTSE 100 index are above their respective 20-DMAs.
- What does it mean for the direction of the two indices?
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Improving market breadth points to further gains in the Euro Stoxx 50 and the UK FTSE 100 index in the coming weeks/months.
As of Friday, 92% of the members in the Euro Stoxx 50 index were above their respective 250-day moving averages. Data from 2002 onwards suggests that when 91%-93% of the members were above their respective 250-DMAs, the index has been up 74% of the times over the subsequent 120 days. That is, in such instances, 74% of the times the index returns have been positive over a four-month period, based on historical performance (the distribution plot).
Distribution plot of Euro Stoxx 50 index returns
Data Source: Bloomberg; Chart Created by Manish Jaradi in Python
As of Friday, 91% of the members in the UK FTSE 100 index were above their respective 20-day moving averages. Data from 2002 onwards suggests that when 90%-92% of the members were above their respective 20-DMAs, the index has been up 63% of the times over the subsequent 30 days. That is, in such instances, 63% of the times the index returns have been positive over a one-month period, based on historical performance (the distribution plot).
Distribution plot of UK FTSE 100 index returns
Data Source: Bloomberg; Chart Created by Manish Jaradi in Python
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— Written by Manish Jaradi, Strategist for DailyFX.com
— Contact and follow Jaradi on Twitter: @JaradiManish
