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
On Thursday 9 February I wrote that there would likely be a final push higher for some equity indices, and not others. It appears that US indices, particularly the Apple-powered Nasdaq100 will indeed make a new high. I expect that it will be the final high, finishing the structure from mid-December 2011, heralding a significant “risk-off” correction.
The original post is below this 15 minute chart of QQQQ, the Nasdaq100 ETF.
Sent: 09 February 2012 18:12
To: aidynkussainov@btinternet.com
Subject: Asset Markets Close to Peaking
We are currently finishing the structure from the low of 31 January, NOT (I believe), from the fourth wave low of 30 January.
We therefore need a fourth wave (about to unfold today/tomorrow) and then a final push higher (Monday?). I expect that a lot of indices will not make a new high on Monday… but Apple-powered Nasdaq100 should.
QQQQ count:
I believe the European Banking sector topped today, and will see substantial, sustained and severe weakness in the weeks ahead. Obviously, this should bring down global risk assets.
Of particular note are the French banks, which look downright sick.
This is a four-hourly chart of the Euro-Area banking index, where the rally from 2011 lows is likely over.
Aidyn Kussainov
London, UK.
+44 (0) 7917 274 989
We are currently finishing the structure from the low of 31 January, NOT (I believe), from the fourth wave low of 30 January.
We therefore need a fourth wave (about to unfold today/tomorrow) and then a final push higher (Monday?). I expect that a lot of indices will not make a new high on Monday… but Apple-powered Nasdaq100 should.
It is quite possible that I “lost” a wave, which would mean that we drop and do not make a new high. I think given the longer-term structures, any weakness should be respected.
SPY count:
QQQQ count:
As expected, global equities rallied slightly to complete structures from January 2012 lows as well as, possibly, November 2011 lows. The stage is set for rapid, substantial declines.
European Banks, shown here on a four hourly chart, have been one of the weakest sectors globally. I expect declines of about 25%, for the sector, in the coming weeks.
NASDAQ100, show here on a four hourly chart completed a longer-term bullish structure in December 2011. Potentially, it could provide a base for much higher levels, however in the medium-term, I expect the rally from December 2011 to correct as much as 8-12%. It is possible that the market will fall much further, but we will have to wait and see the nature of the upcoming decline.
Quite an epic structure is finishing in Emerging Equity Markets (shown here on a four hourly chart of EEM – Emerging Markets ETF). As suggested in an update at the end of 2011, early 2012 saw an impressive rally. While there is certainly scope for further upside (about 4-5%), the structure is very heavy. I suggest extreme caution for longs, and will look to establish shorts.
Finally for today, Russia (here on a four hourly chart) presents an even clearer bearish case.
Aidyn Kussainov
London, UK.
+44 (0) 7917 274 989
Risk assets (equities, commodity FX, commodities) are nearing their peaks. I expect leading equity indices to peak around current levels, +/- 2%. In fact, I expect the risk rally to extend for a few more sessions – therefore, +2% from current levels (before topping) is highly likely.
This is an hourly chart of the NASDAQ100, which is currently in its final consolidation phase, before an expected exhaustive rally to around 2520.
This is an hourly chart of the European Banking index, which is up 30% from its 2012 lows. I believe that it will peak about 5% or so above current levels. We could get to the top directly from here, or could just as easily drop about 6% and then rally to the topping level (EUR120).
Aidyn Kussainov
London, UK.
+44 (0) 7917 274 989
