The FTSE, DAX and CAC end 2024 with mixed signals.
Major European stock indices were anything but aligned in closing out 2024. In the UK, the FTSE 100 Index closed December down for both the month (-1.38%) and the quarter (-0.78%), but was able to finish the year up (+5.69%).
In Germany, the DAX Performance Index closed in positive territory across all three time levels: monthly (+1.44%), quarterly (+3.02%), and yearly (+18.85%).
Unfortunately in France, things were a bit different. While the flagship CAC Index finished December up for the month (+2.01%), it wasn't enough to make up for earlier losses and still finished down for the quarter (-3.34%) and for the year (-2.15%).
Taking a broader look at the Europe STOXX 600 Index, December closed down on a monthly (-0.51%) and quarterly (-2.92%) basis, but was able to eek out a positive close for the year (+5.97%). Meanwhile, the more narrow but popular EURO STOXX 50 Index was a bit of a mini-roller coaster, closing December up for the month (+1.91%), but down for the quarter (-2.09%), and yet still up for the year (+8.28%).
Now, let's take a look at some monthly price charts to visualize the big picture performance. Similar to he US stock markets, you can generally see an uptick since late 2022 across most of the European stock indices, along with a fairly consistent move of the unique Socrates yellow stochastic line crossing the red (slow) and blue (fast) stochastic lines. Looking at the Energy Model, you can see a bump in most cases of followed by some leveling out. In a few cases you can also see the blue (fast) stochastic showed a prominent cross in the later part of 2024 (FTSE, CAC, and Switzerland's SMI).
When studying price charts in the Socrates Platform, pay close attention to the trend lines and oscillators - the Stochastic and Energy Model in particular. When the Energy Model spikes well above its moving average, it indicates a higher risk of losing momentum, which could mean a change in direction may be ahead. In addition, the Socrates Platform includes a unique third stochastic line (yellow) and when it crosses both red (slow) and blue (fast) stochastic lines it can be a helpful indicator, especially if you see alignment with a notable change in the Energy Model.
More generally, the most common approach to studying stochastic indicators is to follow the numerical values: when >80 a market is considered in possible "overbought" condition; when <20 a market is considered in possible "oversold" conditions. Many also look for line crossovers to signal potential alignment of momentum and trend (red crossovers), along with price direction changes (blue crossovers). Keep in mind, the blue (fast) stochastic line is more sensitive to recent price changes, and this can be amplified if you are looking at daily price movement (vs Weekly or Monthly price movement).
Researching markets across different time levels offers a much better view of short-term vs long-term activity. Many follow financial markets on a daily basis, which can certainly be helpful - especially at times of potential market entry or exit - but it's important to keep in mind daily price movement (and indicators based on daily price movement) is most vulnerable to spikes in volatility with reactionary or false price moves. The monthly (and quarterly) time level tends to even out the noise a bit by contrast, providing a cleaner view of actual market trends over the long-term.
Regardless of time level, a change in direction can just be a (relatively) short-term move or brief market correction, it does not necessarily mean it is a true change in the longer term trend. This is why studying market behavior consistently over a period of time, and across multiple time levels (daily, weekly, monthly, etc) is helpful.
Also, while intra-day price movement is worth studying, the Socrates Platform proprietary computer models more heavily weight closing price for each time level as it's a stronger signal of sentiment for that trading period (that day, that week, etc).
Log in to research these and other global financial markets. Go beyond the charts with the Global Market Watch pattern recognition (monthly, quarterly and yearly in particular) along with the Indicating Ranges on a weekly and monthly closing basis. See how - or if - price movement aligns with what different technical indicators and models are picking up on across various time levels (weekly, monthly, etc). This can help shed light on what might be ahead on both a short and long term basis.
Pro and Enterprise members can go deeper in their research with the Reversal System and Timing Arrays, as they look for potential turning points ahead. Keep an eye out for clusters of Reversal points as they represent areas of technical support (Bearish Reversals) and technical resistance (Bullish Reversals). Take note of any relatively large gaps in where Reversal points exist, as it may highlight where a market could see notable price movement before reaching support or resistance.
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With over 1000 global financial instruments to research, from stocks, commodities, bonds, and more, the Socrates Platform allows members to monitor financial market activity from around the world using price charts, technical studies, custom watchlists, unique indicators, and proprietary computer models (the Reversals, Timing Arrays, Global Market Watch, Indicating Ranges, and the Energy Model).
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