This month, the German DAX, French CAC 40, and Euro Stoxx 50 indexes have seen a remarkable collective gain of 10%. To understand the driving forces behind this rally, we sat down with David Morrison, an analyst at Trade Nation. Here's what he had to say:

The Euro Stoxx 50, French CAC, and German DAX have been on a tear since the beginning of May, with the FTSE 100 also performing well. The German DAX has surged 4.4%, the CAC 40 has risen 3.2%, and the Euro Stoxx 50 has gained 3% so far this month. But what's fueling this upward trend?

According to Morrison, the recent rally can be attributed to a rebound in market sentiment after a disappointing April. Investors viewed the pullback as an opportunity to take on long-side exposure, and the first-quarter earnings season has been supportive, with 78% of S&P 500 constituents beating expectations on EPS and 59% on revenues.

However, Morrison believes this positive momentum may not last. He thinks we're in the final leg of a long rally, and it's challenging to see where further gains will come from. Inflation remains high, and the yield curve has been inverted for two years, signaling a potential recession. This could lead to a downturn in US economic data, which wouldn't bode well for equities.

While May has started strong, it's too early to call it the best month for these indices in some time. The rally may continue in the short term, but a correction could be on the horizon. As Morrison cautioned, "It's difficult to see where the catalyst for further gains will come from."