06/04/2010

(This is an excerpt from Friday's blog for Decision Point subscribers.)

A question from a subscriber yesterday prompted me to make a quick review of global markets. I rarely look at global markets because (1) my overriding focus is on the U.S. market and (2) it is my observation that international markets and the U.S. market tend to run in the same direction. There are always exceptions to this rule, but broadly speaking global fundamentals affect nearly all markets and their charts reflect this. To illustrate this point, let's take a look at some global market charts.

The humongus graphic below is a picture of the Global Markets chart book page, one of hundreds of chart book pages on our website. Pages like this allow us to review a large number of charts quickly. On the actual live page for subscribers, each chart is a separate object, that you can click on to get a larger chart for closer examination.

As you view these charts, note how similar most of the patterns are. It is also easy to spot charts that do not follow the crowd.

With one exception, the 20-EMA is below the 50-EMA, which for the most part has these indexes in a medium-term neutral market posture. There are, however, a few whose 50-EMA has dropped below the 200-EMA, which puts them in a bear market by our rules. The 200-EMA is not plotted on the above charts, but we can see it on closer examination.

 

 

 

 

The 50/200-EMA crossover has not taken place with the Nikkei yet, but it is virtually guaranteed that it will happen soon.

While most of the charts may agree in directionality with the U.S. market and are showing weakness, it is interesting to note that five of the charts (25%) are showing considerably more weakness than the U.S. market. Unless we believe that the U.S. market will power upward with enough force to drag lagging global markets along, perhaps we should temper any optimism we may have regarding the market's recovery in light of global weakness.

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Technical analysis is a windsock, not a crystal ball. 

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BIO: Carl Swenlin is a self-taught technical analyst, who has been involved in market analysis since 1981. A pioneer in the creation of online technical resources, he is president and founder of DecisionPoint.com, a premier technical analysis website specializing in stock market indicators, charting, and focused research reports. Mr. Swenlin is a Member of the Market Technicians Association. 

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