Are Europe's markets on the edge of a correction?

The lower percentage of European stocks setting new 252-day highs suggests the region's markets are teetering on the edge of a correction, explains Artemis European manager Mark Page.

Thanks in no small part to Mario Draghi, investors have returned to European equities en masse. The MSCI Europe ex UK index gained 19% in 2012 and rose by another 22% in 2013. At the time of writing, it is also ahead for the year-to-date. Yet despite this good news, the situation in the eurozone is not quite as Arcadian as it might appear. In the last two years, share prices have significantly outgrown profits. This cannot last forever. The median P/E ratio of non-financial stocks is now close to 20x. That is above the average multiple of 17x seen over the last decade – and up from ju...