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GLOBAL EQUITY MARKETS – December 22, 2018

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REVIEW

Global equity markets performance as measured by the iShares MSCI All Country World Index ETF (ACWI.O) broke down the 3 month-long sideways consolidation by breaching the support at 66.3 levels. Breakdown was followed by a sharp drop towards the next support level at 63 levels. Nothing good happens below the 200-day moving average. Back in October the long-term trend following indicator alerted us to the change in trend. Previous support becomes the new resistance. 66.3 levels will act as short-term resistance if markets experience any rebound. In the short-term, there is no chart pattern that would signal a trend reversal.

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GLOBAL EQUITY MARKETS – December 8, 2018

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Announcement: Dear Tech Charts members, We have included a new feature to Tech Charts website. At the bottom of each report we have incorporated comment platform DISQUS. Previous comment platform was not allowing members to post charts and have discussions. With this improvement, I hope to have detailed discussions with our members and possibly post breakout alerts related to each week's report. I also hope that Tech Charts members will be able to interact with each other through the DISQUS platform (at the bottom of each weekly report) to share their knowledge on different instruments available to take advantage of breakout opportunities. I hope we will all benefit from this new feature.

REVIEW

Global equity markets performance as measured by the iShares MSCI All Country World Index ETF (ACWI.O) reversed from its long-term moving average resistance at 71.3 levels. In the beginning of October the index broke down its 7 month-long consolidation and the 200-day moving average. Since then the ETF has challenged the strong resistance area between 71 and 71.5 levels but failed to breach higher. This week's sell-off pulled the ACWI ETF towards the minor support at 66.5 levels. Failure to hold above the short-term support can send the index to the next level at 63 levels. The iShares MSCI All Country World Index ETF is trading below its long-term average and is in a downtrend.

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GLOBAL EQUITY MARKETS – September 9, 2017

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REVIEW

I am not sure if Volatility index can be analyzed from a classical charting perspective but over the past few months, the VIX futures and since 2016, the CBOE Volatility Index respected important support/resistance levels. Irrespective of the headlines related to geopolitical tensions, the three different continuation future price charts of the Volatility Index (Oct, Nov, Dec) are showing signs of multi-month bottoming process. The importance of 15-16 area as a resistance can be seen on the Volatility Index and the VIX futures price charts. Last one month's price action arguably formed tight consolidations in the form of a pennant/symmetrical triangle below the important horizontal resistance. I think we should keep a close eye on these charts in the coming weeks. Completion of the month-long tight consolidation range can result in a breakout above the strong resistance area between 15 and 16 levels.

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CBOE VOLATILITY INDEX (VIX)

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Strong technical support & resistance levels are formed after consecutive tests of the same price level. Support/resistance areas show the battle between the buyers and the sellers. The strong resistance for the CBOE VOLATILITY INDEX (VIX) stands at 14.75 levels. Over the past 5 months, the VIX consolidated between 10 and 15 levels. Price tested the horizontal resistance at 14.75 for 3 times over the course of the 5 month-long consolidation. Since the beginning of April, volatility index has been inching higher towards the strong resistance. A daily close above 15.15 levels can complete the 5 month-long consolidation and result in a spike in volatility. A spike in volatility can put downward pressure on global equity indices. This chart should be on your radar in the coming weeks.

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S&P 500 INDEX and VIX

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S&P 500 INDEX weekly scale price chart

S&P 500 INDEX weekly scale price chart

S&P 500 index is resting on the 2 year-long support/resistance level. Breakout to all time highs in July 2016 was followed by a weak rally in July-August period. Since mid-August the index has been in a sideways consolidation. The pull-back reached the previously broken resistance at 2,120 levels. Price action in the September-October period can be identified as a descending triangle with the horizontal boundary (support) standing at 2,120 levels. Over the past two months the S&P 500 index tested the strong support for 3 times. Breakdown below 2,120 levels will signal further correction for the U.S. Equities.

CBOE Volatility index is consolidating between 13 and 17 levels. Breakdown below 2,120 on the S&P 500 index could also result in a breakout on the VIX. The level to watch on the CBOE VIX is 17.35. If S&P 500 index manages to hold above 2,120 levels, last two months sideways consolidation will be labelled as a pull back and we will expect new highs in the coming months. In that case 17-18 area should become a medium term high for the CBOE VIX.

S&P 500 INDEX daily scale price chart

S&P 500 INDEX daily scale price chart

CBOE VOLATILITY INDEX daily scale price chart

CBOE VOLATILITY INDEX daily scale price chart

CBOE VOLATILITY INDEX (VIX)

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CBOE Volatility index moves into a new territory of high volatility. Usually high volatility periods suggest corrections in equity markets. In the past several decades breakouts above 20 levels on the VIX was followed by major equity market corrections.

Chart shows CBOE Volatility Index with weekly closing prices. Last week of August the VIX closed at 26.05 levels which was clearly above strong resistance at 22. Last few weeks surge in volatility cleared two important technical levels. Both the 7 year-long downward sloping trend line and the horizontal resistance at 22 levels were broken on the upside, suggesting a change in trend.

Unless we see a sharp reversal below 22 levels, following weeks/months will lead to higher volatility levels and further weakness in global equity markets.

*Chart shows updated current price as of 1/9/2015 EST 12:30 PM

CBOE VIX