weekly market report 6/29: looking at stocks worldwide

Later in this update, I will show the tremendous symmetry between stock markets in several parts of the world. While I will show about 7 months of time here, I could pick a variety of time scales and repeatedly demonstrate remarkable symmetry.

Of course, most investors that I know do not give any attention to global markets or the global economy. They

First, not much happened in the last week in several other markets I monitor, forecast, and trade. That includes gold and US bonds. So, my mid-term (multi-month) forecasts are still in place… but with some short-term neutrality at the moment.

One market that has very clearly shifted in conformity to my forecasts is the forex rate for EUR:USD. I repeatedly emphasized that near or above 1.13 (shown in purple), I would be interested in taking positions for a decline below the lows early this year (to below 1.06).

However, that market still could rebound to above 1.14. For now, it is “leading” to the downside among a few markets that ideally I would expect to see fall together: that one plus crude oil plus stocks. So, since it is leading, I tend not to trade it much, given that my typical orientation is to invest more in “laggards” with the expectation that they often “catch up” or at least “follow” the “leaders.”

For oil, we also see that, as I expected, the upside momentum has declined since April. It has remained in the $31-$42 range for over a month. I do expect it soon to “roll over” and fall sharply. However, I expect the same for stocks and I am more likely to focus my exposure in to stock markets.

What do we see in stocks? Let’s look at a few places across recent months. In the US and Japan, the rebound in recent months has been rather strong (which is why I expect those to fall furthest if/when a global decline in price manifests).

Similar to crude oil prices, we can see that the upward momentum in stock prices worldwide has decreased since April and then appears to have stalled in recent weeks. (The same timing is visible in the EUR:USD chart above as well.) Below, notice how big the rebound has been in each chart since the plunge from February to March.

Europe has been a bit weaker than the ones above.

Australia is just a bit weaker than Europe:

Weakest of the ones I am showing is Hong Kong. Notice that prices have barely moved since mid-April:

You can also see that prior to the plunge of February through March, stocks also peaked in January in Hong Kong. In other words, this market has been a “leader” that the rest of the world “followed” (at least in the last 7 months or so).

Next, notice that there was a big dip in June across all 5 stock markets shown above. Scroll back up to see what I mean clearly.

Then, notice that while there have been dips in several of those markets between March and June, there was not a widespread symmetry until mid-June. So, I propose that the stock market investors are again synchronized.

As I have repeatedly stated weak after weak, I expect stock prices to move downward… potentially very rapidly and for a remarkably long time. The set-up in market conditions is in place for that. Naturally, over time I will have more data available and I may revise my forecasts.

For now, due to my pre-existing expectation that stocks would lose momentum upward and then eventually collapse again, everything that I see is confirmation that my forecast is manifesting generally as expected. Whether it is tomorrow or next week, I expect to soon be positioning once again for rather heavy exposure to profit from a big decline in stocks. (I already have some exposure in for all the investors I am trading for directly at this time.)

Note also that oil prices may actually decline even more sharply than stock prices. Since oil made a new high in late June, unlike the stock markets of the 5 regions shown above, right now oil is the “laggard.”

Many stock markets worldwide peaked in early June. The EUR:USD peaked a few days later. Oil peaked in late June.

They might not all fall imminently – or any of them at all. However, I am on rather high alert now for an acceleration of a downward move (a selling spree), likely to include quite a few markets.

In fact, I would also expect gold and silver to “join” in if this is the major deflationary dumping of “speculative assets” that I expect. Minor markets like bitcoin could also destabilize rapidly.

So, I could be quite conservative for now in my trading, given the extent of the decline that I anticipate. But at the moment I have already entered some modestly aggressive positioning.

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