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Wednesday, June 11, 2008

Fibonacci Heaven, Equities Party On (Update1)

In Fibonacci Heaven, Equities Party On I wrote: “The international indices are all in Fibonacci heaven. All the indices have bounced and are now entangled in the 50% retracement level. A couple indices have had the strength to make it all the way to the 61.8% level. ONE index appears to be invincible: The Brazilian BOVESPA.

It is pop or drop time across the globe. Since economic data continues to deteriorate, I would argue for more drop than pop.”

Since then they have all dropped. It turns out the entire globe was in a Bear Market Rally.

Investors Get More Bearish on U.S., U.K.; Brazil Bulls Retreat: “Investors from the U.S. to Europe to Japan are growing more convinced stocks will drop the next six months as commodity prices curb profits and force central banks to raise interest rates, a survey of Bloomberg users showed.

The Standard & Poor's 500 Index, the U.K.'s FTSE 100 Index, Japan's Nikkei 225 Stock Average, Spain's IBEX 35 Index, the Swiss Market Index, France's CAC 40 Index, Italy's S&P/MIB Index and Germany's DAX Index will fall, according to the Bloomberg Professional Global Confidence Survey of 3,189 users taken June 2 to 6. In Brazil, the only market where investors anticipate higher prices, optimism faded, the survey showed.

The MSCI World Index's nine-week rally from a 17-month low ended last month as oil and corn helped lead gains in prices of raw materials. Financial stocks in the MSCI World declined the most since the end of April, dropping 11 percent, as Federal Reserve Chairman Ben S. Bernanke and Jean-Claude Trichet, the president of the European Central Bank, signaled they may lift borrowing costs to fight inflation.”

I wrote this many a time: The Global ‘Decoupling Theory’ is Garbage. A US recession, which is now indisputable, WILL suck the down the rest of the globe.

The master of Fibonacci Retracements is Tim Knight over at The Slope of Hope.

Related Posts:
Global Decoupling Theory, Correlation Contagion
The Dollar Smile Theory


Anonymous said...

Brazil did have one unique event when their credit rating was upgraded lowering the cost of capital over an enormous breadth. The piper will be paid eventually...

Great site.

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