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Global Equity Markets Poised To Fall

Let's take a quick look at some of the major global stock markets from a longer-term perspective (10-year weekly charts). Starting with the S&P 500, with prices recently rolling off the top of the large broadening wedge pattern as well as the recent bearish cross on the weekly PPO, along with many other factors, it looks like the SPX is headed to at least the 1820 support level in the coming weeks to months.

S&P 500 10-year weekly Sept 18th

S&P 500 10-year weekly Sept 18th

By nearly all accounts, it appears that the 29% bear market in the Tokyo Nikkei Index since the mid-2015 highs doesn't appear to be over. Note how the weekly PPO trading solidly below the zero line helps to confirm that the primary trend remains bearish despite the recent oversold bounce/bear market rally.

Nikkei 10-year weekly Sept 18th

Nikkei 10-year weekly Sept 18th

The Sydney All Ordinaries Index has been moving lower since backtesting the recently broken primary bull market uptrend line & appears likely to continue lower in the coming weeks to months, especially in light of the recent bearish crossover on the weekly PPO, which often indicates more downside to come for weeks to months.

All Ordinaries Index 10-year weekly Sept 18th

All Ordinaries Index 10-year weekly Sept 18th

The recent bearish crossover & overbought readings on the weekly time frame help to support the case that the TSX Composite Index is likely headed lower in the coming weeks to months. Continued weakness in oil & gold prices will only further support the bearish case for the Canadian economy.

TSX Composite Index 10-year weekly Sept 18th

TSX Composite Index 10-year weekly Sept 18th

A break & weekly close below this yellow primary bull market uptrend line will likely bring the Dax to at least the 8000 level in the coming months. Note the recent failed breakout/bull trap.

Frankfurt Dax Index 10-year weekly Sept 18th

Frankfurt Dax Index 10-year weekly Sept 18th

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Sep 18, 2016 8:52pm|Categories: Equity Market Analysis|Tags: , , , , , , , , , |11 Comments

11 Comments

  1. pkm48193 September 18, 2016 9:06 pm at 9:06 pm

    Thanks Randy. It is good to have perspective to prevent tunnel vision.

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  2. Art September 18, 2016 9:22 pm at 9:22 pm

    Thanks for the timely update!

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  3. Shambo September 18, 2016 9:25 pm at 9:25 pm

    Thanks Randy, good overview.

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  4. Eric K September 18, 2016 10:09 pm at 10:09 pm

    Randy, thanks as always. So what’s the plan? How do you suggest positioning for this?

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    • rsotc September 19, 2016 9:16 am at 9:16 am

      Eric- As these are long-term weekly charts, their primary use is to help get an idea on the bigger picture: What the overall larger trends are & where prices are likely headed in the coming months. Best to use the daily & 60-minute time frames to help hone down the timing on any entries & exits. Also keep in mind that the S&P 500 (or any of those other global indices) is a compilation of the most bullish & bearish stocks & sectors at any given point in time. As such, best to try to identify the most bullish & bearish sectors within the broad market & then sniff out the most bullish & bearish stocks (or sector ETFs) within those sectors for long & short trading opps.

      I’ll also add that until we can say with a very high degree of confidence that the primary trend in the US markets is either clearly bullish or bearish, as the SPX has traded in a large, sideways range for the last 2 years thereby making the primary trend indeterminable/sideways, it is probably best to trade or invest with a long/short mix: the most bullish longs & the most bearish short trade ideas. Once the primary trend becomes clear, trend traders would align most of all of their trades with the primary trend while swing traders can attempt to profit both long & short trading major rallies & corrections.

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  5. joefriday September 19, 2016 7:55 am at 7:55 am

    So should I assume u are bearish Randy? LOL… Thanks again..nice work!

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    • rsotc September 19, 2016 9:28 am at 9:28 am

      jf- Only time with tell if I’m right or wrong on this one. I’m always open to all possibilities but find little value in posting ambiguous, contradictory analysis. If I don’t have a decent read on the charts, I will say so and although I can make a bullish or bearish case on the market, any sector or stock at just about any point in time, I typically try to keep things simple by pointing out the technical developments that support the bullish or bearish case for the market or a sector/stock that I’m following, again, if my opinion is strong enough. Doing so will inevitably cause me to eat crow at times as I don’t publish C.Y.A. analysis (i.e.- providing both bullish & bearish scenarios all the time & jumping on whichever one plays out) but I think there’s more value in providing actionable analysis vs. contradicting analysis.

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  6. riverbirch September 19, 2016 8:40 am at 8:40 am

    Thanks Randy, I think the market will progress through a slow roll over on weekly charts but we may be in a stair step up, elevator down on daily charts. We could reach the 1800 target by the end of March 2017.

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    • rsotc September 19, 2016 10:02 am at 10:02 am

      Agreed. I’ve maintained all year that this market, once it has finally topped, won’t be like the 2000 & 2007, which saw pretty impulsive & persistent selling once the top was finally in. More likely, it looks as this market has been very slowly grinding out a top & the next major move down is likely to roughly mirror the slow grind leading up to this topping process over the last couple of years. The US is most likely to be a zombie economy going forward for years, not falling off a cliff rather more like a slow grind back & forth, in & out of recessionary/expansionary levels. At least that’s just a hunch, we’ll just have to adjust to the charts as they develop.

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  7. Art September 19, 2016 9:59 am at 9:59 am

    Yes thank you for that Randy, I hate it when people try to hedge every call, just doesnt help me. You Da Man

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  8. joefriday September 19, 2016 11:52 am at 11:52 am

    I’m with ya Randy… I am no fence sitter either…and I appreciate that you actually take a position..right or wrong..it’s better than being on a site where they try to cover all the bases = untradeable .

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