The Canary in the Coal Mine: European Consumer Confidence

The chart below shows the European Consumer Confidence index -ECC- in red and the US Consumer Sentiment index - USCS- in green.

I first analyzed these series here. The ECC made a new high and the USCS stayed weak as expected.

Notice that recently the ECC has turned downwards. This was a signal that accompanied major tops for the stock market in the past (black circles) - 2000 and 2007. It seems that after divergence between the two series (purple segments), as soon as the ECC turns, the stock market tops.

I have also highlighted two cases in which the signal did not work (red rectangles). An indication of the signal being a fake was in both cases a move to new highs (black segments) by the ECC accompanied by strength in the USCS.