MSCI ALL COUNTRIES WORLD INDEX Archives

GLOBAL EQUITY MARKETS – April 22, 2017

April 22, 2017/2 Comments/in Blog Post, DEVELOPED MARKET EQUITIES, EMERGING MARKET EQUITIES/by Aksel Kibar

It was a mixed week for Global equity market performance due to each countries own political and geopolitical developments. However, the benchmark for Global equities, the MSCI ALL COUNTRY WORLD INDEX still shows a clear uptrend. MSCI ALL COUNTRIES WORLD INDEX captures large and mid cap representation across 23 Developed Markets and 23 Emerging Markets countries. With 2,481 constituents, the index covers approximately 85% of the global investable equity opportunity set. iShares has an MSCI ACWI ETF that seeks to track the MSCI ALL COUNTRIES WORLD INDEX. The ETF is listed on the Nasdaq Stock Exchange.

Since the beginning of 2016, MSCI ACWI ETF (ACWI.O) is in a clear uptrend. Over the past two months the price has been challenging the resistance at 63 levels. The continuation of the uptrend will depend on the strength around this resistance level.

iSHARES MSCI ACWI ETF (ACWI.O)

Last one month's price action can be identified as a possible pennant formation. Pennants are short-term continuation patterns that mark a small consolidation before the previous move resumes. Pennants, which are similar to flags in terms of structure, have converging trendlines during their consolidation period and they last from one to three weeks. Breakout above 63 levels can renew upside momentum both on daily and weekly scale. Strong support area remains between 62 and 62.5.

This week there are 3 new chart pattern breakout signals.

GLOBAL EQUITY MARKETS – February 25, 2017

February 25, 2017/0 Comments/in Blog Post, DEVELOPED MARKET EQUITIES, EMERGING MARKET EQUITIES/by Aksel Kibar

Compared to traditional bar charts, candlestick charts can be more helpful to analyze price action. We can see the relationship between the open and close as well as the high and low. The relationship between the open and close is considered vital information and forms the essence of candlesticks. This week's price action in global equity markets is worth analyzing with the help of candlestick chart patterns.

Doji are important candlesticks that provide information on their own and as components of in a number of important patterns. Doji form when a security's open and close are virtually equal. The length of the upper and lower shadows can vary and the resulting candlestick looks like a cross, inverted cross or plus sign. Alone, doji are neutral patterns. Any bullish or bearish bias is based on preceding price action and future confirmation.

Doji convey a sense of indecision between buyers and sellers. Prices move above and below the opening level during the session, but close at or near the opening level. Neither bulls nor bears were able to gain control and a turning point could be developing. The relevance of a doji depends on the preceding trend or preceding candlesticks. After an advance, or long white candlestick, a doji signals that the buying pressure is starting to weaken.

ISHARES MSCI ALL COUNTRIES WORLD INDEX ETF (ACWI.O)

After a year-long uptrend ISHARES MSCI ALL COUNTRIES WORLD INDEX ETF (ACWI.O) reached its 2015 high levels that acted as resistance. This week's price action formed a Doji on the weekly scale chart. Given that the preceding trend was up and strong, this week's Doji clearly suggested that the buying power has stalled. Strong horizontal resistance stands at 63 levels. Global equities can experience a consolidation of the earlier gains and possibly a pullback towards the year-long upward trend line. Doji alone is not enough to forecast a reversal. Following week's price action around the strong resistance will provide valuable information.

ISHARES MSCI ACWI ETF - WEEKLY SCALE

DJIA, RUSSELL 2000, ACWI

January 14, 2017/0 Comments/in DEVELOPED MARKET EQUITIES, Uncategorized/by Aksel Kibar

This was another strong week for global equities. Both MSCI ALL COUNTRIES WORLD INDEX and MSCI EMERGING MARKETS INDEX finished the week with strong weekly candlesticks, opening at the lower end and closing at the highest level for the week.

ISHARES MSCI ALL COUNTRIES WORLD INDEX ETF (ACWI.O)

The MSCI ACWI captures large and mid cap representation across 23 developed markets and 23 emerging markets countries. With 2,486 constituents, the index covers approximately 85% of the global investable equity opportunity set. The iShares MSCI ACWI ETF seeks to track the investment results of the MSCI ACWI. The ETF is listed in the NYSE. Price chart of the iShares MSCI ACWI ETF shows the strong uptrend that started in the beginning of 2016. Year-long upward sloping trend line will act as support between 59 and 59.50 area. Until the long-term trend line is violated we should expect higher levels for the global equity benchmark.

ISHARES ACWI ETF – WEEKLY SCALE

ISHARES MSCI EMERGING MARKETS ETF (EEM)

ISHARES MSCI EMERGING MARKETS ETF had a strong week. Over the past three weeks strength in the emerging markets pushed the NYSE listed iShares MSCI EM ETF from 34 levels to 36.68 levels. Last week’s price action possibly completed a double bottom. If EEM manages to hold above 36.40 levels in the following weeks, next price target could be the September 2016 high at 38.20 levels.

ISHARES EM ETF – WEEKLY SCALE

DJIA & RUSSELL 2000 INDEX (.DJI & .RUT)

Almost everyone who follows the financial news network must have come across the 20,000 level for the Dow Jones Industrial Average. Below chart shows the significance of the 20,000 level from a technical perspective. 20,000 has now become a short-term technical resistance other than a psychological one. Similar chart development can be seen on the Russell 2000 index. Both indices formed month-long flag consolidations. For Russell 2000, the short-term resistance stands at 1,390 levels. Flags are bullish continuation chart patterns.

DJIA – DAILY SCALE

RUSSELL 2000 INDEX – DAILY SCALE

#TECHCHARTSALERT

Below are the charts that generated chart pattern breakout signals during this week.

VOLKSWAGEN AG (VOWG.DE)

VOLKSWAGEN had a strong weekly close and the stock cleared the year-long horizontal resistance at 144.50 levels. Breakout above the horizontal resistance possibly completed a year-long ascending triangle that can act as a bottom reversal. Price target for the bullish chart pattern stands at 178 levels. 144.50 should act as support.

VOLKSWAGEN – WEEKLY

SANCHEZ ENERGY CORP. (SN)

SANCHEZ ENERGY completed an 8 month-long rectangle continuation chart pattern with the strong weekly breakout. Rectangle price target stands at 13.60 levels. 9.55 should act as support.

SANCHEZ ENERGY – WEEKLY SCALE

FAURECIA (EPED.PA)

FAURECIA after its 4th test, cleared a year-long horizontal resistance and completed an ascending triangle that can act as a bottom reversal. Ascending triangle price target stands at 47 levels. 37.30 levels should act as support.

FAURECIA – WEEKLY SCALE

DUBAI FINANCIAL MARKET GENERAL INDEX (.DFMGI)

UAE’S DUBAI FINANCIAL MARKET GENERAL INDEX completed a 9 month-long rectangle chart pattern with the strong weekly close above 3,620 levels. Strong horizontal resistance was tested for 4 times over the past 9 months. Rectangle chart pattern price target stands at 4,040 levels. 3,620 levels should act as support.

DFMGI – WEEKLY SCALE

#TECHCHARTSWATCHLIST

Below are the charts that are added to the TECH CHARTS WATCHLIST.

888 HOLDINGS (888.L)

888 HOLDINGS is a provider of online gaming entertainment and solutions. The stock is listed in the UK. Price chart of the 888 HOLDINGS formed a year-long rectangle with the strong resistance standing at 233.5 levels. Stock had a strong breakout in the first quarter of 2016 and since then the price has been in a sideways consolidation. According to Edwards and Magee 3% breakout guideline, for confirmation of the breakout price should close above 240.65 levels.

888 HOLDINGS – WEEKLY SCALE

BOOKER GROUP (BOK.L)

BOOKER GROUP is a consumer non-cyclical company listed in the UK. The company offers a range of grocery, tobacco, alcoholic products and other products. Price chart of BOOKER GROUP formed a year-long ascending triangle. Strong horizontal resistance stands at 187.5 levels. The horizontal boundary was tested for 4 times over the past year. Breakout above 187.5 can push the stock to all-time high levels. A daily close above 194 levels is required for confirmation.

BOOKER GROUP – WEEKLY SCALE

CSPC PHARMA (1093.HK)

CSPC PHARMACEUTICAL GROUP is a healthcare company listed in the Hong Kong Stock exchange. Stock price formed a 2 year-long rectangle with the strong horizontal resistance standing at 8.60 levels. Latest consolidation below the upper boundary of the rectangle can be a preparation for an upward breakout. A daily close above 8.85 levels will confirm the breakout from this massive sideways consolidation. It is important to note that the breakout will push the stock to all-time high levels.

CSPC PHARMA – WEEKLY SCALE

CGI GROUP (GIB)

CGI GROUP is a technology company listed in the NYSE. Stock price formed an 8 month-long ascending triangle with the strong horizontal resistance standing at 50.20 levels. Over the past 8 months CGI GROUP tested 50-50.2 area for six times. Breakout above 50.20 levels will push the stock to all-time high levels. A daily close above 51.70 levels will confirm the breakout from the bullish continuation chart pattern.

CGI GROUP – WEEKLY SCALE

OWENS-ILLINOIS INC (OI)

OWENS ILLINOIS INC is a basic materials company listed in the NYSE. The company is engaged in the manufacturing of glass containers. Stock price of OWENS ILLINOIS formed a 7 month-long symmetrical triangle with the upper boundary standing at 19.70 levels. Symmetrical triangles are usually considered continuation chart patterns. A daily close above 20.10 levels will confirm the breakout from the symmetrical triangle.

OWENS ILLINOIS – WEEKLY SCALE

NH INVESTMENT & SECURITIES CO (005940.KS)

NH INVESTMENT & SECURITIES CO, formerly WOORI INVESTMENT & SECURITIES CO, is a Korea-based financial service provider specialized in the investment banking and securities markets. The stock price of the company formed a massive year-long complex head and shoulder bottom with the neckline standing at 10,860 levels. Strong horizontal resistance was tested for 4 times over the past year. Breakout above 10,860 can complete the long-term bottom and suggest higher prices in 2017. A daily close above 11,185 levels will confirm the breakout.

NH INVEST & SEC – WEEKLY SCALE

UK FTSE, ACWI, NETFLIX, VOLKSWAGEN

January 7, 2017/0 Comments/in DEVELOPED MARKET EQUITIES, Uncategorized/by Aksel Kibar

In the first week of the new year global equities had renewed strength. In the first half of December 2016, benchmark for the global equities, ISHARES MSCI ACWI had a strong breakout which was followed by three weeks of pullback. Price action in the first week of January pushed ISHARES MSCI ALL COUNTRIES WORLD INDEX to December 2016 highs suggesting the continuation of the uptrend in the following weeks.

ISH ACWI ETF – WEEKLY SCALE

ISHARES GLOBAL INDUSTRIALS ETF (EXI)

ISHARES GLOBAL INDUSTRIALS ETF that broke out of 2 year-long consolidation in the beginning of December 2016 and possibly completed its pullback to its horizontal support at 74.80 levels. This week’s long white candle also shows the renewed strength in the global industrial equities. EXI is an ETF listed in the NYSE.

EXI – WEEKLY SCALE

UK FTSE 100 INDEX (.FTSE)

UK FTSE 100 INDEX is setting up for a breakout to all-time high levels. Given the multi-decade long consolidation below 6,950 levels, breakout to all-time high levels above the horizontal resistance can be extremely positive for UK equities.

UK FTSE 100 – QUARTERLY SCALE

SUPERGROUP (SGP.L)

SUPERGROUP is a consumer cyclical company listed in the UK. The monthly scale long-term chart shows the strong 6 year-long horizontal resistance at 1705 levels. Strength in the UK FTSE index can result in similar breakouts in UK listed equities. Breakout to all-time highs for SUPERGROUP can be followed by multi-month uptrend.

SUPERGROUP – MONTHLY SCALE

SMITH DS (SMDS.L)

DS SMITH PLC is a basic materials company listed in the UK. The stock formed a 16 month-long H&S continuation chart pattern with the strong resistance at 425 levels. Breakout above 425 levels will push the stock to all-time highs. A daily close above 436 levels will confirm the breakout from multi-year continuation chart pattern.

DS SMITH – WEEKLY SCALE

ANDRITZ (ANDR.VI)

ANDRITZ is an industrial company listed in Austria Vienna Stock Exchange. 3 month-long rectangle chart pattern can act as a launching pattern for the year-long symmetrical triangle. Breakout from the 3 month-long rectangle can result in the completion of the year-long symmetrical triangle. A daily close above 50.50 levels will confirm the breakout from the lengthy sideways consolidation.

ANDRITZ – WEEKLY SCALE

GENMAB (GEN.CO)

GENMAB is a healthcare company listed in Denmark. Stock formed a 5 month-long rectangle with the upper boundary standing at 1300 levels. Earlier in November 2016, the stock violated the upper boundary. This was possibly a premature breakout which should be followed by the eventual confirmed breakout. A daily close above 1340 levels will confirm the breakout from the 5 month-long sideways consolidation with a possible price target of 1580 levels.

GENMAB – WEEKLY SCALE

PLASTIC OMNIUM (PLOF.PA)

PLASTIC OMNIUM is a consumer cyclical company listed in France. Stock formed a year-long rectangle with the strong horizontal resistance standing at 31 levels. Breakout above 31 levels will push the stock to all-time high levels. Breakouts from horizontal consolidation ranges to all-time high levels are usually followed by increased momentum. A daily close above 32 levels will confirm the breakout from the continuation chart pattern. Rectangle price target stands at 36.70 levels.

PLASTIC OMNIUM – WEEKLY SCALE

FORMPIPE (FPIP.ST)

FORMPIPE is a technology company listed in Sweden. Stock formed a 16 month-long ascending triangle with the strong horizontal resistance at 9.75 levels. This week’s price action violated the boundary line but the weekly close was below the resistance. A daily close above 10 levels will confirm the breakout from the bullish continuation chart pattern. Ascending triangle price target stands at 12 levels.

FORMPIPE – WEEKLY SCALE

GOLDWIND (2208.HK)

GOLDWIND is an energy company listed in Hong Kong. Stock price formed 8 month-long rectangle chart pattern with the horizontal boundary standing at 13 levels. A daily close above 13.40 levels will confirm the breakout from the continuation chart pattern. Rectangle chart pattern price target stands at 16 levels.

GOLDWIND – WEEKLY SCALE

NETFLIX (NFLX.O)

NETFLIX is a consumer non-cyclical company listed in NASDAQ. Stock formed a year-long rectangle with the horizontal resistance standing at 129.35 levels. This week’s price action was the 4th test of the horizontal boundary. Breakout from the long-term bullish continuation chart pattern can result in another strong trend period for NETFLIX. A daily close above 134 levels will confirm the breakout. Rectangle price target stands at 172 levels.

NETFLIX – WEEKLY SCALE

VOLKSWAGEN (VOWG.DE)

VOLKSWAGEN is a consumer cyclical company listed in Germany. Stock formed a year-long ascending triangle that could act as a possible trend reversal. Breakout above the horizontal boundary at 145 levels can fill the gap between 145-160 area. A daily close above 148 levels will confirm the breakout from the year-long ascending triangle. Chart pattern price target stands at 180 levels.

VOLKSWAGEN – WEEKLY SCALE

FAURECIA (EPED.PA)

FAURECIA is a consumer cyclical company listed in France. Stock formed a year-long ascending triangle that could act as a reversal. This week’s price action breached the horizontal boundary at 37.30 levels. A daily close above 38.40 levels will confirm the breakout. Chart pattern price target stands at 46.5 levels.

FAURECIA – WEEKLY SCALE

CHINA COMM CONSTRUCTION (1800.HK)

CHINA COMMUNICATIONS CONSTRUCTION is an industrial company listed in Hong Kong. Stock formed an 8 month-long symmetrical triangle continuation chart pattern. Breakout above 9.35 can complete the text book bullish continuation chart pattern with a possible price target of 12.

CHINA COMM CONS – WEEKLY SCALE

ACWI and EEM

November 16, 2016/0 Comments/in DEVELOPED MARKET EQUITIES, EMERGING MARKET EQUITIES, Uncategorized/by Aksel Kibar

Since the election in the first week of November, U.S. equities had a strong performance. Though, strong rally in U.S. equities has been limited to very few sectors. ACWI ETF (underlying instrument: MSCI All Countries World index that tracks the performance of the 23 developed and 23 emerging markets) has been in a correction since the beginning of September. EEM ETF (underlying instrument: MSCI Emerging Markets index) broke down two major support levels, a year-long upward trend line and a horizontal support at 35.88 levels.

There is a possibility of the latest downward trend channel to form a flag continuation and breakout higher without breaching the year-long uptrend on the ACWI ETF. However, failure to do so can result in a similar price action that we have seen on the EEM; a breakdown of the year-long trend line support. Both charts suggest that equity market strength is limited to U.S. equities and in the U.S. markets it is limited to very few sectors.

ACWI ETF weekly scale price chart

ACWI ETF daily scale price chart

EEM ETF weekly scale price chart

S&P 500 INDEX and MSCI ACWI

September 25, 2016/3 Comments/in DEVELOPED MARKET EQUITIES, EMERGING MARKET EQUITIES, Uncategorized/by Aksel Kibar

Over the past two weeks, global equity markets rebounded from strong support levels. Last two week’s recovery came after the S&P 500’s pull back to its long-term support level at 2,125 levels. Long-term charts of S&P 500 index and a broader representation of global equity market performance, the MSCI ALL COUNTRIES WORLD INDEX, possibly completed a re-test of the broken resistance/support levels. Once a resistance is cleared it becomes support and vice versa.

S&P 500 index, a benchmark for large cap US equities broke out of a year-long sideways consolidation in mid-July. After reaching 2,193 levels in mid-August, the index pulled back to test the broken resistance at 2,125 levels. Both the year-long upward trend line and the horizontal support held well and the index rebounded without any technical damage to the long-term trend. Unless the markets reverse once again to challenge the support at 2,125 levels, we will claim the latest price action was a pullback and is likely to be followed by a resumption of the long-term uptrend.

Monthly scale price chart of S&P 500 index

Weekly scale price chart of S&P 500 index

MSCI ALL COUNTRIES WORLD INDEX captures large and mid cap representation across 23 Developed Markets and 23 Emerging Markets countries. With 2,481 constituents, the index covers approximately 85% of the global investable equity opportunity set. Please note that iShares has an MSCI ACWI ETF that seeks to track the MSCI ALL COUNTRIES WORLD INDEX.

In mid-July MSCI ACWI, similar to S&P 500 index, completed a significant chart pattern. A year-long H&S continuation chart pattern was completed with a breakout above 410 levels. Since then the index possibly completed a pull back to the neckline of the H&S chart pattern. Last week’s sharp reversal increased the likelihood of a continuation towards 443 levels. Unless the index reverses to challenge the support at 405 levels, we will identify the latest price action as a pullback that is likely to be followed by a resumption of the long-term uptrend.

Monthly scale price chart of MSCI ACWI

Weekly scale price chart of MSCI ACWI

If global equity indices mentioned above resume their uptrends, we are likely to see fresh new highs on several individual securities. Financial media usually pays attention to 52 week highs as a measure of security’s strength. There is even a better way to look at this; all-time highs. It is usually difficult for investors to buy stocks that are reaching their all-time highs. But usually the most promising part of an uptrend starts when a stock moves into uncharted territory in other words all-time highs. Below are some of the stocks on my watch-list that are likely to breakout to all-time highs and some that are likely to record 52 week highs. These stocks formed clear bullish chart patterns with identifiable horizontal boundaries. Breakouts will not only complete the chart patterns but also will push the stocks to all time highs and 52 week highs.

U.S. & CANADA

EUROPE

JAPAN & HONG KONG

EUROSTOXX 600, MSCI ACWI and MSCI EM

March 6, 2016/0 Comments/in DEVELOPED MARKET EQUITIES, Uncategorized/by Aksel Kibar

As we are getting closer to eventful few weeks (thanks to Central Banks), I wanted to review some of the charts that will be important in our decision-making.

For those who trust the validity of long-term trend lines; most of the global equity indices breached +7 year-long upward sloping trend lines. These are major technical breakdowns, not minor violations.

Last few week’s counter-trend moves didn’t reverse the negative technical outlook on the long-term charts. Indices continue to make lower lows and lower highs and breaking down previous reaction low levels.

8-10% rallies can take place in bear markets. For reference I plotted the line chart of the MSCI ALL COUNTRIES WORLD INDEX. Major bear markets over the past two decades show counter-trend moves exceeding 8% in price appreciation. In fact during 2001-2002 bear market MSCI ACWI rebounded from 203 levels to 245 levels, a 20% rally, followed by another 35% drop.

Wide price swings and of course mood swings are characteristics of market correction. Since the beginning of the correction in mid-2015, there has been two counter trend price movements. One has taken the index from 383 levels to 413 levels (7.8%) during September-November 2015 and the other one is ongoing. So far the reaction resulted in 8.8% appreciation from the low of 356 levels.

Line price chart of MSCI ALL COUNTRIES WORLD INDEX with linear scale

Line price chart of EUROSTOXX 600 Index on semi-log scale

Line price chart of MSCI EMERGING MARKETS INDEX on semi-log scale

EURO STOXX 600, NIKKEI and MSCI ACWI

February 13, 2016/0 Comments/in DEVELOPED MARKET EQUITIES, Uncategorized/by Aksel Kibar

After reviewing the charts I posted two weeks ago on Euro Stoxx 600 and MSCI ALL COUNTRIES WORLD INDEX, I can conclude that since then there has been more technical damage on global equity indices. Until markets recover above previously broken support levels, we should watch out for further downside in the global equity markets. In other words I’ll treat the current market conditions as a bear market.

Markets seldom move in straight lines. Earlier price action on Euro Stoxx 600 shows how two different bear markets unfolded in 2001 and 2008. 330-340 area will remain as strong resistance. Both the 7 year-long uptrend and the long-term moving average are breached on the downside. Rebounds should be considered as bear market rallies.

Monthly price chart of EURO STOXX 600 INDEX

Weekly price chart of EURO STOXX 600 INDEX

It clearly takes more effort to change the direction of the trend on MSCI ALL COUNTRIES WORLD INDEX when the global equity benchmark includes 23 developed and 23 emerging market equity index performance. So far it has given us a bearish message. 374-400 area will remain as strong long-term resistance. Failure to recover above 374 levels will resume the downtrend.

Monthly price chart of MSCI ALL COUNTRIES WORLD INDEX

Weekly price chart of MSCI ALL COUNTRIES WORLD INDEX

MSCI Emerging markets index is in a clear downtrend. The downtrend can accelerate. Index broke down decade-long trend line support and also the 5 year-long horizontal support at 850 levels. It is usually difficult to reverse momentum after such significant breakdowns.

Monthly price chart of MSCI EMERGING MARKETS INDEX

Sell-off in Japan has been sharp over the past few weeks. Two strong technical supports overlapping at 17,000 levels has been broken on the downside. While we can conclude that in the short-term the market is oversold, it will need a lot of effort for the market to reverse the negative sentiment and recover above 17,000 levels. This market is also suggesting weak performance for the coming months.

Weekly price chart of NIKKEI 225 index

DOW JONES AVERAGES and MSCI ACWI

January 30, 2016/2 Comments/in DEVELOPED MARKET EQUITIES, Uncategorized/by Aksel Kibar

There are discussions right now if last few week’s sell-off was another failed breakdown. Was this another bear trap? Did Central Banks again manage to put a floor to equity markets? ECB’s dovish comments and BOJ’s negative interest rate moves both came this month, after sharp sell-off in equity markets.

Due to developing bearish chart patterns and the fact that major indices are below their long-term averages I’m weighing the possibility of a correction more than a strong bull market in the coming months. This time could be different and the technical outlook might prove to be a bear trap. I’m fine with that. That’s what markets are. Current chart set-up is something that I can’t ignore and I’ll try to explain here.

First let’s look at two major equity indices that we have been following. On a monthly scale “close” was at the border. The jury is still out in my opinion. Though, I would say last week of the month we have seen a good attempt to close at the higher levels for the month.

Richard W. Schabacker in his book TECHNICAL ANALYSIS AND STOCK MARKET PROFITS (Printed in US in1932) discusses Important Reversal Formations. Under this section there is a detailed study of Head and Shoulder reversal chart patterns. We are all familiar with the Head and Shoulder chart pattern. I want to draw attention to a specific type that we are seeing right now on equity index charts. Schabacker explains:

Here is the chart he was analyzing at the time. Please note that the original chart doesn’t include the red trend line (neckline). I added this to show the similarities with the current chart patterns.

Several decades later similar chart patterns are appearing on the widely followed and traded equity indices. Dow Jones Transportation Index broke down a similar downward sloping trend line. Head and shoulder price target is at 5,800 levels, still far from current 6,906 levels.

Now let’s look at some similarities between 2008 and 2016. In 2008, Dow Jones Industrial Average reversed its 4 year-long uptrend with a Head & Shoulder top. Neckline was downward slanting. After the breakdown there was a pullback that violated the neckline but couldn’t push above the long-term average or inside the trend channel. The head and shoulder top that formed in 2007-2008 showed significant market weakness due to its drooping shoulder.

Dow Jones Composite Average is now forming a similar Head and Shoulder top with downward sloping neckline. Both the long-term moving average and the lower boundary of the 6 year-long trend channel is violated. If this time is not different, current chart set-up suggests a correction is more likely in the following months than the continuation of the bull market.

We can also look at MSCI ALL COUNTRIES WORLD INDEX and compare the top in 2007-2008 with the latest chart development. I think the current technical conditions can’t be ignored. I want to give these markets some more time to prove the bears wrong.

MSCI ALL COUNTRIES WORLD INDEX

January 9, 2016/0 Comments/in DEVELOPED MARKET EQUITIES, Uncategorized/by Aksel Kibar

2016 started with negative performance for global equities. And weak performance can continue in the coming months. Sharp sell-off in Chinese equities mainly driven by a devaluation of the Chinese yuan, resulted in a broad market weakness. Sharp price action is making the headlines as it is one of the few bad starts for the new year in several decades. However, since April 2015 charts have been showing market weakness. (Earlier updates on MSCI ALL COUNTRIES WORLD INDEX here)

Weakness can be seen from the MSCI ALL COUNTRIES WORLD INDEX failing to breakout to new high levels in April 2015. Global equities experienced the first sharp sell-off in August 2015. Last quarter of 2015 was a reaction to August sell-off. Now, it seems like the downward momentum is picking up steam. Index is below its long-term average once again. Breakdown below the September low at 374, can send the index towards 300-350 area. MSCI All Countries World Index captures large and mid cap representation across 23 Developed Markets and 23 Emerging Markets countries. (For more information on MSCI indices) With 2,491 constituents, the index covers approximately 85% of the global investable equity opportunity set.

Europe’s STOXX 600 index has similar deteriorating outlook with the index now testing a 7 year-long trend line support. In April 2015 STOXX 600 reversed from 400 levels for the third time since 2000. Failure to clear 400 during its 3rd test suggests supply is overcoming the demand every time index tests 400 levels. If we see Euro Stoxx 600 breaking down its long-term trend line support, we will expect a larger scale correction towards 300 levels.

Dow Jones Composite index that measures changes within the 65 companies that make up three Dow Jones averages: the 30 stocks that form the Dow Jones Industrial Average (DJIA), the 20 stocks that make up the Dow Jones Transportation Average (DJTA) and the 15 stocks of the Dow Jones Utility Average (DJUA), is also showing weakness with a classic bearish chart pattern; Head and Shoulder Top. Support level for the index is at 5,600 levels. Breakdown below 5,600 can send the Dow Jones Composite Index towards 4,700-5,000 area. (For more information on Head and Shoulder Top chart pattern)

Posts

iSHARES MSCI ACWI ETF (ACWI.O)

ISHARES MSCI ALL COUNTRIES WORLD INDEX ETF (ACWI.O)

ISHARES MSCI ALL COUNTRIES WORLD INDEX ETF (ACWI.O)

ISHARES MSCI EMERGING MARKETS ETF (EEM)

DJIA & RUSSELL 2000 INDEX (.DJI & .RUT)

VOLKSWAGEN AG (VOWG.DE)

SANCHEZ ENERGY CORP. (SN)

FAURECIA (EPED.PA)

DUBAI FINANCIAL MARKET GENERAL INDEX (.DFMGI)

888 HOLDINGS (888.L)

BOOKER GROUP (BOK.L)

CSPC PHARMA (1093.HK)

CGI GROUP (GIB)

OWENS-ILLINOIS INC (OI)

NH INVESTMENT & SECURITIES CO (005940.KS)

ISHARES GLOBAL INDUSTRIALS ETF (EXI)

UK FTSE 100 INDEX (.FTSE)

SUPERGROUP (SGP.L)

SMITH DS (SMDS.L)

ANDRITZ (ANDR.VI)

GENMAB (GEN.CO)

PLASTIC OMNIUM (PLOF.PA)

FORMPIPE (FPIP.ST)

GOLDWIND (2208.HK)

NETFLIX (NFLX.O)

VOLKSWAGEN (VOWG.DE)

FAURECIA (EPED.PA)

CHINA COMM CONSTRUCTION (1800.HK)

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