See also Fighting the Urge to Jump into Gold Stocks (For Now)
In the world of technical analysis, there are a lot of techniques that one can consider. One common one works something like this:
1) A security declines sharply in price then bottoms.
2) After the bottom the security bounces higher
3) After the bounce the security turns down again and heads back toward the previously established low.
And then it gets interesting. Because from there one of a couple of things typically happens. Either:
4a) The previous low is broken and price begins another meaningful down leg, or;
4b) The previous low holds and a decent rally begins.
Stock market indexes around the globe are presently in Stage 3 above and headed for Stages 4a or 4b. What happens from here is extremely important, so I suggest you keep a close eye on things in the near future.
A Glance Around the Globe
Just for “fun” please scroll through the charts below and for each one note that:
A) They have taken a significant hit
B) They have each a very tenuous “line in the sand” just below current levels.
Figure 1 – Australia (EWA) (Courtesy: AIQ TradingExpert)
Figure 2 – Canada (Ticker EWC) (Courtesy: AIQ TradingExpert)
Figure 3 – MSCI EAFE (ticker EFA) (Courtesy: AIQ TradingExpert)
Figure 4 – Germany (Ticker EWG)(Courtesy: AIQ TradingExpert)
Figure 5 – Malaysia (Ticker EWM) (Courtesy: AIQ TradingExpert)
Figure 6 – Singapore (Ticker EWS) (Courtesy: AIQ TradingExpert)
Figure 7 – United Kingdom (Ticker EWU) (Courtesy: AIQ TradingExpert)
Figure 8 – Brazil (Ticker EWZ) (Courtesy: AIQ TradingExpert)
Figure 9 – Indonesia (Ticker IDX) (Courtesy: AIQ TradingExpert)
Figure 10 – Latin America (Ticker ILF) (Courtesy: AIQ TradingExpert)
Summary
I am not too good at “predicting” things so I will not offer an opinion as to what happens next. The key point I am trying to make here is that we have arrived (in my opinion) at a “critical juncture”. Either:
A) These major market averages will hold at or above their recent lows and a meaningful rally can ensue,
OR
B) These major market averages will break below their recent lows and then stage a quick reversal, which would likely lead to a meaningful rally
OR
C) These major market average will break down below the red lines drawn on Figures 1 through and things are going to get a whole lot uglier.
So now – i.e., the days and weeks just ahead – is an important time to keep your eye on the, um, balls (?)
Jay Kaeppel
