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GLOBAL EQUITY MARKETS – March 17, 2018

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REVIEW

To summarize the current technical outlook in the Global Equity markets, I would say "range-bound". Global Equity benchmark charts below show the boundaries of the recent consolidations. After the sharp sell-off in the first half of February, global indices are returning back to low volatility conditions. Both the iShares MSCI All Country World Index ETF (ACWI.O) and the iShares MSCI Emerging Markets Index ETF (EEM) are in a long-term uptrend. Both benchmarks are above their long-term averages. Latest consolidations are taking place above strong support areas.

  

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GLOBAL EQUITY MARKETS – February 10, 2018

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REVIEW

Global equity benchmarks deviated far from the averages that a 10% correction in 2 weeks is still considered a reversion to the mean. With this week's continued sell-off both benchmarks for Global equities, the iShares MSCI All Country World Index ETF and the iShares MSCI Emerging Markets Index ETF reached their respective 200-day (40 week) moving averages. The 200-day moving average and the lower boundary of multi-month long upward trend channels are forming support around the same levels. Read More

GLOBAL EQUITY MARKETS – October 7, 2017

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REVIEW

It has been a volatile week for Spanish politics and the country's financial assets. Spain's IBEX 35 index has been trending lower since May 2017. The downtrend in the short-term formed a well-defined trend channel. With this week's sell-off, the index rebounded from the lower boundary of the trend channel. There is no classical chart pattern that would suggest that index is finding a bottom or another chart pattern development that would signal further downside. However, two interesting candlestick patterns drew my attention which I find worth mentioning.

At inflection points, markets give clues about the internal dynamics of the price action. These are better identified on candlestick charts. The weekly chart of the IBEX 35 index formed a hammer. This bullish reversal candlestick pattern becomes more important if it forms at important support areas. We can see 3 important technical levels overlapping at 10,000 levels. These are; the lower boundary of the 5 month-long downward sloping trend channel, the 200 day (40 week) moving average and the year-long upward trend line.

Hammer is a bullish reversal pattern that forms after a decline. In addition to a potential trend reversal, hammers can mark bottoms or support levels. After a decline, hammers signal a bullish revival. The low of the long lower shadow implies that sellers drove prices lower during the session. However, the strong finish indicates that buyers regained their footing to end the session on a strong note. While this may seem enough to act on, hammers require further bullish confirmation. Confirmation could come from a gap up or long white candlestick.

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EURO STOXX 50 INDEX

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Euro Stoxx 50 index is either offering a rare buying opportunity similar to 2011 or one last chance for the bulls to exit before the downtrend resumes.

The bearish case suggests that the Euro Stoxx 50 index peaked in April 2015 after completing a 2 year-long head and shoulder top which was followed by the breakdown of the multi-year uptrend (2009-2015). According to this outlook, last few months price action is a pullback to the broken trend line. Pullbacks are usually followed by the continuation of the dominant trend.

STOXX 50 I

Weekly scale chart showing the bearish case

The bullish case suggests that the Euro Stoxx 50 index completed a 2 year-long head and shoulder top but found support at the lower boundary of a long-term trend channel. According to this outlook, last few months price action is a consolidation above trend line support (lower boundary of possible trend channel). Once the index completes the consolidation it can reverse and trend higher.

STOXX 50 II

Weekly scale chart showing the bullish case

Daily scale chart shows the last 3 months consolidation between 2550 and 2900. For the bullish case I will be looking for a breakout above 2900 levels. For the bearish case, a breakdown below 2550-2650 area will signal lower prices for the coming months.

STOXX 50 III

EURO STOXX INDICES

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European indices are at critical levels. Breakout higher could result in a multi-year uptrend. Failure to clear those strong long-term resistance levels could signal the end of last 5 year’s uptrend. Whatever the outcome, the implications will be long-term.

STOXX EUROPE 50 index cleared the 15 year-long trend resistance in late 2014. EURO STOXX 50 and EURO STOXX 600 are challenging their long-term trend lines. Fresh breakouts on these two indices could add momentum to the uptrend.

EUROSTOXX 600

EUROSTOXX 50

STOXX 50 INDEX

UK FTSE 100, STOXX 50, NIKKEI 225

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Global equity indices are gaining upside momentum. Recent breakouts above long-term trend lines suggest multi-month uptrends. Last week's price action pushed UK FTSE 100 index to all time high levels. Charts that are very close to long-term breakouts: MSCI ALL COUNTRIES WORLD INDEX, EURO STOXX 50 INDEX and UK FTSE 100 INDEX.

Positive price action is likely to continue in the developed market equities.

JAPAN NIKKEI 225 INDEX

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