European Equity Markets Close to Bottoming

I believe European Equity Indices are close to putting in medium-term bottoms around current levels. Below is an hourly chart of the German DAX, which appears to be in the final stages of a “diagonal” move from mid-May highs of just under 6,600.00 (red “iv”). If correct, the bounce should at least carry us back to 6,600.00, with scope for 6,900.00 and beyond.  

 

This is an hourly chart of the EuroSTOXX 50, where a diagonal also appears to be ending. The correction higher should take us to at least 2300, about 8% above current levels, with a high probability of a move to 2,400.00 and 2,450.00.

Aidyn Kussainov

 

US, European Equity Markets At Or Very Close To Bottoms

We have what I have been looking for – a very clean impulse lower from the May highs, illustrated here on the IWM (US Small Caps ETF).

 

Any strength should be respected, and will likely carry far.

 

 

Aidyn Kussainov

1/60A Portland Place, W1B 1NN

London, UK.

+44 (0) 7917 274 989

 

Market Update - European Stock indices, VIDEO LINK

http://www.youtube.com/watch?v=pZsEp7nStvk

 

Aidyn Kussainov

1/60A Portland Place, W1B 1NN

London, UK.

+44 (0) 7917 274 989

 

TECH BRIEF - LONDON (EUROSTOXX 50)

An update on the EuroSTOXX 50.

 

This index has been particularly badly hit, falling 14% in four weeks. It has been dragged down by the Spanish, Italian and French components, and supported by the German ones.

 

There are some tentative signs of a base emerging. The structure, from the 2550 March 2012 high could be finishing its impulsive drop. At the same time, we could still only be finishing the wave III drop. In either case, a rally of at least 5% is soon to be expected.

 

This will most likely coincide with strength in US indices, a reversal lower in TY and possible new highs in Crude Oil (above $110).

 

TECH BRIEF

EUR/USD:

 

Consolidation/correction phase in force. Likely to see overlapping/meandering moves for the next few sessions. Targets remain below 1.29.

 

USD/JPY:

Move lower from 72.98 (label “2?”) is very likely complete at “3?”. This could have been the whole of the correction from March 2012 highs, or part of it. 80.57 offers good support levels for a bounce into 81.80 or so.

 

US10YR:

Allow for one more high into high 131’s, but expect a move lower after that. Weakness likely to extend towards 130’.

 

CRUDE OIL:

A wedge/ending diagonal is developing. The structure is basing. So far, no impulse higher/correction lower evident. Possible to use wedge/diagonal base as a stop level (down to $100), for a bounce into at least $$106-108.

 

ESc1:

Wave III of [I] has or is about to be traded. Consolidation/wave IV is likely for the rest of this week. Targets higher cluster around 1380. For an immediately bearish view, 1386 wave I low should not be seen again before 1340. If we rise above 1386, a more complex topping pattern is likely in play, possibly a 1-2, 1-2 coil.

 

 

 

Aidyn Kussainov

1/60A Portland Place, W1B 1NN

London, UK.

+44 (0) 7917 274 989

 

Risk Assets Close to Their Peaks

A number of equity indices are close to their peaks.

 

On 28 October 2011, I wrote:

 

“EuroSTOXX 50 rallied over 30% from September lows. The rally has impulsive characteristics. It appears to be the first impulse that is correcting the August 2011 collapse, with one more upward thrust to follow in mid-2012, from much lower levels (possibly around September 2011 lows)”.

 

I attached a “roadmap”, shown here as a repost. It appears that the EuroSTOXX complied with the forecast, and is currently (end of March 2012) peaking around 2600 (high so far 2550).

 

I believe that for most equity indices, the correction of the 2011 decline is over, and indices are ready to drop again. The French CAC40, shown here on a four-hourly chart, may have already peaked. For the CAC40, I expect a decline of about 20% in the next 6-8 weeks.

 

The Russian market also appears very close to its intermediate-term high. Shown here on a four-hourly chart, the correction that began in October 2011 appears to be nearing its end. It is possible that wave V is currently unfolding, in which case the double highs established this month are likely to be breached, however I do not expect the strength to last. I expect declines of about 45% for this index.

 

An index composed of leading names in Central European space is shown on a daily chart below. This is a particularly weak chart, where I also expect serious weakness in the months ahead.

 

Finally for today, I will make what might seem like an outlandish forecast. I believe that the NASDAQ100, shown here on a weekly chart of QQQQ (Nasdaq100 ETF), is completing a nearly 10 year correction that began in 2002. If correct, NASDAQ should fall toward the post-tech bubble lows. This count and view are invalidated should the index rise a further 6.5% from current levels, to about 2960.

 

 

 

 

 

Aidyn Kussainov

London, UK.

+44 (0) 7917 274 989

 

Will It Break?

European equity markets, shown here on the hourly chart of the EuroSTOXX 50, are primed for a substantial (over 5% drop) from current levels. First supports are at 2400 (a 4.6% drop from current levels).

 

This view is invalid on penetration of 2540 (to the upside) and gains strength on closing the morning gap (2488).

 

Aidyn Kussainov

London, UK.

+44 (0) 7917 274 989