Europe poised for a renaissance

The cover of Barron's features a bullish article on Europe. I agree. Europe made remarkable progress in 2012. Consider how far 10-year Greek bond yields have fallen: The Barron's article states that the STOXX 600 trades at a forward 12 month P/E of 11.5 and sports a dividend yield of 3.8%. Bullish technicals Technically, European indices appear poised for further gains. I previously wrote about a possible inverse head and shoulders relative breakout of the Euro STOXX 50 (FEZ) against the MSCI All-Country World Index (ACWI) (see Intriguing head and shoulders patterns). Since then, FEZ has staged a relative breakout against ACWI: Despite the bad news that the eurozone saw last year (Greece, Spain, Italy), eurozone stocks, as measured by the Euro STOXX 50 has shrugged off the negatives and rallied strongly since the summer. In fact, the index has staged a decisive upside...