Monday, June 22, 2015

Global Equity Index Sitting On The Precipice Of A Major Breakdown.......ANOTHER PESKY FACT!

Global Equity Index Sitting On The Precipice Of A Major Breakdown

Here is a chart of The Global Dow equity index, which is currently sitting squarely on its post-2012 UP trendline.

What is the takeaway? It is simple. The Global Dow is sitting squarely (at the moment) on its post-2012 UP trendline line, which happens to lie at about 2536. This trendline also connects the lows of October 2014 as well as the lows of January, February and June of this year. A close below the trendline would presumably be bearish for equities in general. And one reason why a breakdown may come soon than later is the frequency of the trendline touches recently. As the duration between touches of a trendline or support/resistance line decreases, the odds of a break increase.Therefore, it would not surprise us to see a breakdown sometime soon.

Let's look at potential key levels in The Global Dow. (it may surprise you to learn that, despite very little money trading off of the specific index, it follows technical levels – Fibonacci in particular – very closely). This chart indicates some levels that may provide support in the event of a trendline break (e.g., roughly 2500, 2420, 2280, 2060 & 1715):

What is The Global Dow? 

It is a broad equity index made up of 150 of the largest stock markets around the world. Its components are also weighted equally so its behavior can provide perhaps a decent read on global equity breadth. That said, it is heavily weighted toward the U.S. so domestic stock action can exert perhaps undue influence on the movement of The Global Dow. Here is the weighting by countries around the globe:

USA 42.27%
Japan 9.97%
Great Britain 8.30%
France 6.85%
Germany 4.74%
Switzerland 4.62%
China 3.05%
India 2.39%
Spain 2.29%
Hong Kong 2.20%
Brazil 1.86%
Canada 1.64%
South Korea 1.52%
Australia 1.37%
Italy 1.15%
Mexico 0.96%
Taiwan 0.79%
Portugal 0.73%
Finland 0.68%
Sweden 0.64%
Russia 0.54%
Greece 0.44%
Norway 0.40%
Denmark 0.32%
Netherlands 0.29%

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