Instead, the Italian Stock market is very weak (- 67% from top) and it is:
a) in the hand of the Fiscal Cliff and the possible wildcard that Geithner could play if President Obama fails to reach an agreement with the Republicans; the US President, although recently re-elected, can not afford a rise in taxes on the lower-middle class who voted him nor a potential default, and his opponents know this and are holding firm, but I think (or maybe I hope) that American politicians are less defeatist than Italians and that they find a honorable solution to avoid devastating consequences on the markets;
b) in the hand of Mario Monti, who is preparing for parlamentary elections; he likes to markets that hope in his government with the Democratic Party but without the radical-left.
However, FTSEMIB has a considerable potential compared to DAX ; it is in a sort of bullish "head and shoulders", with an accumulation area formed in the last three months that has a good potential to push the market higher (even to + 40%).
According to Elliott Wave, FTSEMIB index is in minor wave 3/c/y of intermediate wave (a)/(w) of primary up wave [C]/[Y] .
Many leading stocks are drawing interesting medium and long term reversal patterns and some tinny stocks (eg Banca Profilo, Falck, Tiscali, Gruppo Editoriale l'Espresso) are capable of exceptional performance (even in the face of a risk of loss equally impressive ...).
Since the end of the previous bull market cycle (May 2007) we could be near the most interesting market juncture, better than that of the summer of 2009 (that was the classic "V bottom" that few traders and investors have been able to grasp).
At this point there are two possible strategies for those who have not already long positions:
1°) if the market retraces in an orderly manner, buying leaders when and if the stochastic daily falls again to the 20 AND with a minimum of 50% retracement of the previous bullish wave if this is wave 2 or 38% for those in Wave 4; this hypothesis could occur if the Fiscal Cliff goes wrong but not too much;
2 °) if the market immediately breaks to the upside, buy the congestions's breakout; this hypothesis could occur if the Fiscal Cliff will have an imminent resolution.
However, we must always remember that, until proven otherwise, the long-term trend is still bearish and that, for now, FTSEMIB IS NOT IN A BULL MARKET LIKE DAX.
One thing at a time; in the meantime, let's see if there will be a market's breakout and if we can climb in time with decent prices to avoid a stop loss in a possible pullback , then once we are on the market, if it's a decent uptrend, everything may become easier, we raise the stop and .... hope (for lay people) or pray (for believers).