Amidst "Brexit" and everything happening within the European landscape, there is a balance of power (BOP) tilting between the 'bears' (sellers) and the 'bulls' (buyers.) Felton Business News reported that the balance of power appears to have been moving towards the 'bears,' indication that a shift in power might result in creating price moves.
This BOP indicator was developed in 2001 by Igor Livshin and was first introduced in the August issue of the Issue of Stocks and Commodities Magazine that year. The BOP measured the 'strength' of the bulls and the bears according to how each group was able to push pricing to 'extreme levels.' What happened this year should be enough to warn market observers that a price change is about to happen.
Another key indicator is the Average Directional Index of ADX. The current ADX for the Europe Developed Real Estate Ishares ETF (IFEU) is at 31.83. The readings indicate that anything over 25 suggests a strong trend in the favor of either the bears or the bulls. Anything under 20 has no weight, and a reading of 20-25 would send mixed trend signals.
Despite that growth, however, the European Commission issued a gloomy forecast for economic growth in the Union this year. According to Yahoo Finance, analysts within the Commission have predicted a period of a slowdown among the 'key' economies belonging to the Union caused by various factors including trade disputes as well as growing debt.
The expected slowdown is analyzed to be 1.3% this year, a slight improvement from 1.9% in 2018. Growth is expected to offset the slowdown at 1.6% but that's to arrive later in 2020. This estimate marks a significant slowdown from previous values, where the slowdown was placed at 1.9% and the growth at 1.7%.
Investors have not liked the analysis at all. It didn't offer any solutions towards the trade tensions some members have with the US. It also further affected the ailing markets of Germany, the DAX Index, and other shares. For instance, iShares MSCI Eurozone ETF EZU lost 2% of its stock while Vanguard FTSE Europe ETF VGK lost 1.5%.
The same investors, however, are still having an optimistic outlook of the future. They are still looking to research names, and are on the lookout for a dip in the market to re-enter and re-evaluate their position.
