Given all the focus on US markets lately I wanted to share a few high level thoughts on international markets. After all the ECB and BOJ keep printing and that is used in some circles as a primary reason to keep buying stocks.
Yet, despite all the printing and rates remaining negative in many markets, the entire global market landscape has taken a drubbing in February.
The correction way along overdue as the ongoing one way lift in asset prices was unsustainable.
Below then a few key observations on key index charts starting with the global Dow Jones $DJW:
Coming off a similar overbought RSI reading as in 2007 the correction in February has pushed price below the monthly 5 EMA. The month is not over and opportunity remains to repair the damage. As long as the trend line holds and the month closes above the 5 EMA no permanent technical damage has been inflicted yet. Should we see a close below both technical factors risk opens up to a much larger move including a tag of the middle monthly Bollinger band.
To note: New highs would come on a negative monthly RSI divergence. In 2007 that occurred later in the year and marked the end of the bull market then.
$DAX has rejected its multi year trend line dating back to 2000. It marked the top in 2015 and again contained price advances in 2017 and 2018. The rejection opens risk into confluence support near the 2009 trend line and the monthly 25MA. Should this trend line break in 2018 the next key level support would be the 2014-2015 trend line.
$NIKK has been in a very precise channel since the 2016 global market low and the current corrective move as stopped at the lower trend line and appears to potential repeat a similar RSI pattern as in 2013. The weekly 50MA is just below the trend line and may offer support. The weekly 21 MA may prove to be initial resistance on any bounces similar to early 2014.
$FTSE has broken its trend line dating back to the 2016 lows and Brexit. It has also fallen below its .236 fib. Both would offer resistance on the further bounces. Risk is into the .382 fib on any further weakness. The break of the trend line is a red flag and $FTSE needs to recapture it quickly to repair the technical damage.
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Categories: Market Analysis