Global Equity Markets, Risk Assets Close to Major Peaks

From the last update:

“In the next few days, look out for a slowdown in momentum on shorter-term charts and divergences on medium-term ones.”

This has come to pass – momentum slowed down through over a week of sideways, lateral action and began to diverge on four hourly charts. Signs of a major top are continuing to accumulate.

 

Here on a four hourly chart of the EuroSTOXX 50 the lateral consolidation took place just above the initial target for the whole correction at 2400. I expect the index to top within about 2% of current levels. It could go higher, but that is entirely unnecessary. Sustained trading below 2401 (RED line) increases confidence in a “top-in” view.

 

Going out further, in the longer-term, I expect global equities to fall far and for a long time, as shown here on a daily chart of the Dow Jones Industrial Average.

Global Equity Markets Close to Peaking

Equity markets across the world have been mired in what appears to be side-ways ranges (admittedly, fairly wide ranges) for over two months, since the early June 2012 lows.

 

I believe that corrections higher, that began in June 2012 are coming close to their end. In the next few days, look out for a slowdown in momentum on shorter-term charts and divergences on medium-term ones.

 

Here on the four hourly chart of the EuroSTOXX 50, I expect wave C to finish around 2400. This will likely complete the correction to the decline that started back in Spring of 2012. In the medium-term, this index is likely to drop over 20% from current levels.

 

This is a four-hourly chart of the Australian ASX200. The five-wave, impulsive decline from the May 2012 high is very clear. So far, so is the correction higher, where the last leg appears to be over – it will likely peak around 4270.

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