26 Jan A Quick Look At World Indices For 2015
The increase in volatility across Indices has been quite notable over the last 6 Weeks and this often occurs before a deep correction or a trend change. Therefore here’s a few longer term charts of some Indices to look at the bigger picture.
From the outset this looks like a healthy chart. There are historical corrections on DOW and SPX that look identical to this one and on every occasion the Bull markets continued in both Indices. As things stand, shorting this would be a risky place to be.
The FTSE has been trading around current levels for what seems an eternity but when you consider how heavily its weighted with Miners and Oil, its not doing too bad at all. Until proven wrong 6900 is still a major barrier that has been great to short from but a clear Daily close beyond 6877 must surely be bullish for this Index. After such a long period of consolidation any break-out is likely to have legs.
The spikes and dips seen recently on SPX do fit with previous topping patterns, more so when accounting for the recent volatility. Yet when you look at the long term chart like this its clear to see the bull market is very mature and somewhat extended, but there’s nothing shouting out to go short yet.
Europe’s disconnection with the rest of Western Indices is clear in this chart. I probably wouldn’t want to touch it for anything other than a hedge against other positions.
Of all the Indices this one looks most interesting. Price is range-bound as shown on this 4 hourly chart covering the last 5 Months or so. What initially looks like a triangle (generally a continuation pattern) could be viewed as a “Diamond Top”. Its difficult to predict the outcome until confirmation is seen so for now its best to day trade the volatility with a good chance of seeing a profit even on “wrong” trades as long as you trade small enough and have the margin and patience to wait for the profit to come.
Whilst DOW does appear to have a more bearish slant to it compared to most of the other Indices, its unlikely for it to de-couple from those Indices so you have to decide if you think DOW is leading the other Indices through a topping process, or whether its lagging them and this triangle eventually turns out to be a continuation pattern.
My personal view having looked at these Indices combined (excluding Italy), there’s nothing that looks immediately bearish about them, in fact they’re all in technical bull markets. In fact every one of them is trading above its 100 Day Moving Average.
Its only when you consider the geo-political environment, the halt of QE in the U.S, the lack of any meaningful recovery in Europe, the collapse in the price of oil etc etc, making a committed long term trading decision becomes rather difficult unless you have a solid trading system in place to rely on.