World is flat! Literally

World Index(321) (In house-based on 44 active indices of the world) Near Term Trend: Down

In the previous review I said " on the weekly chart it can be seen that the bulls are swung back and attempting an upward break of the falling parallel channel (blue), i.e. indicating an reversal in the trend. Still on a safer side, we will wait till break of '329' for a confirmation.

The bulls tried very hard to shore up the markets, but failed miserably. Further the index also lost an opportunity to post close above the important threshold level of "329", at least 4 times in the last few weeks.This is outright bearish indication. Remember that since mid-October, I was actively vouching for a bullish trend (counter trend within the structural bearish trend). However what we had seen (at the best) is a sideways movements below the threshold level of 329. Expect a fresh down wave in the global equity markets, may be retesting Oct 08 lows or even lower.

Bulls are ready for the counter attack..?

World Index(311) (In house-based on 44 active indices of the world) Near Term Trend: Positive

In the last review (293) I said "a move beyond upper end of the channel (daily) will confirm end of wave 'c', thereby opening wave 'd' on the upside;on the weekly charts a move beyond 329 is required for confirmation of reversal of the trend; on the monthly charts there is a 'possibility' of double bottom provided we should not see a down move, below the October lows, from here". This we have seen happening (anticipated recovery) in the last 2 weeks. See the inlaid daily chart; the wave 'c' ended exactly there(at the last review date) & as anticipated the index broken the falling parallel channel, thereby resuming wave 'd'. Now, expect continuation in wave 'd' & then swift down move (last) "e", may be by year end.On the weekly chart (first two trading sessions of this week) the bulls swung back and attempting an upward break of the falling parallel channel (blue), i.e. indicating an reversal in the trend. Still on a safer side, we will wait till break of '329' for a confirmation. In short, as anticipated, the "world markets" are holding October cycle lows and the bulls are making 'careful' attempts to regain the control, once again, at least for the next few weeks/months. On the downside, the possibility of fresh 'slide' is low, however, retesting of October low on some of the world indices can't be ruled out, but this slide will be an opportunity to 'buy' rather than 'sell'.

Holding "October" low..Reversal is in sight..

World Index(294) (In house-based on 44 active indices of the world)

Last 3-4 weeks, I am arguing for a "recovery" in the global stock markets, based on 'macro' level technical analysis of this 'in house' World Index (WI). This week, I maintaining my pending bullish reversal stance, despite of a 15% drop since the beginning of the month. The current month, so far, has not created a fresh low visa-a-vis the month of October (see inlaid monthly chart). As such there is a possibility of "double bottom" formation, here, provided we should not see a fresh "down move" from the present level. Further the index is almost there at previous consolidation zone (Jan-May 2005), normally such crucial zones created in the up move acts as "support" zones in subsequent down moves. On the weekly chart, the price moves are still intact in the falling parallel channel (3rd) & a move beyond 329 (value for the coming week) i.e. break above the upper end of the channel is required for the first stage confirmation of reversal in the trend.

On the daily charts, I am suspecting a "triangle'"(14 Oct is a starting point) with "a" wave ending at 286 (27th Oct); wave "b" retracing 80% of wave "a"; & the current fall could be wave "c". The wave 'c' has unfolded exactly within the falling parallel channel, and a move beyond the upper end of the channel can confirm the end of the wave "c", thereby opening wave "d" on the upside. Even if we assume the end of the wave "c" is still away, notice that the last 2 trading sessions are very close to the lower end of the parallel channel, which in anyways suggests an up move at least till the upper end of the channel. In short, the WI is at very crucial point, as far as all the 3 time frames(Monthly/weekly/Daily) are concerned; holding the Oct low (i.e. 27th Oct) would lead to 'significant' up move in the next few weeks/months. Let see how the things unfolds.

Global Markets & performance of BRIC

World Index Vs BRIC

In the World Index (WI) analysis we have seen that WI has retraced back to the April 2005 level. The "Developed" economies had significantly lost the value in the current financial turmoil, with many indices retraced as much as to 2003 levels(DOW,Nikkei,FTSE,CAC40) with only one participation form emerging economies, Taiwan. However from the BRIC group, Brazil, India & China has manged to stay afloat above April 2005 lows, with Russia going down slightly below April 2005. (See respective charts). Few others economies like Chile (SASE), Indonesia(JSX), Mexico (MXSE),PERU(LIMA),S.Africa (JSE All), S.Korea(KOSPI),Venezuela (IBC) are trading at higher levels than there respective April 2005 lows. Brazil IBovespa

Russia MOS Times India-Sensex China-SSE Composite

Seen anticipated recovery efforts....

World Index(333) (In house- based on 44 active indices of the world) Near term trend: Positive

In the last review (21st Oct) I had argued in favor of "Bullish reversal" at least in the short to medium term, in the World index, based on a)Possible halt in the furious fall at fib 0.618 retracement of entire bull run (2003-2007) b) Importance of October time cycle in economic cycles. See the inlaid monthly "close" chart, the month of "October" has ended almost exactly on 0.618 fib level, thereby making an attempt to halt the unprecedented fall in the global markets, at least in near term.

Further, I had also illustrated 3 downward parallel channels on the weekly chart in the previous review. As anticipated the lower end of the 3rd channel (Blue) has successfully supported the fall, causing recovery across the global markets.

Now expect a continuation in the "recovery efforts" , in the next 4-7 weeks, or may be till the year end, provided the index "pierce" the "important" hindrance of the "upper end' of the 3rd (blue) parallel channel.

World Index at major support of "Golden ratio", expect rally across the world markets

World Index (335): (Based on 44 active stock market indices of the world)

Near term trend: Positive (Corrective) The spectacular bull run (2003-2008) represented by perfect 'rising' parallel channel has ended with a downward break in Jan 08. Since then the "World" index has seen value erosion of over 45% in just 11 months (top made in Nov07). Interestingly, the fast and furious fall has likely to 'halt' (no confirmation for using word 'end') near 0.618% Fibonacci retracement level - popularly known as "Golden ration" -of the entire rise in the world markets since 2003. Further, the month of "October" has played a crucial role in economic cycles, world over. These two important cycles viz price action near the golden ration & October (time) cycle are indicating towards a corrective rally in the global stock markets. However each individual market is likely to play lead/lag role in the next few days/weeks. For e.g. Dow is already up over 19% since the low of 7773(10th Oct). Observe the steepness of the fall in each subsequent "perfect" falling parallel channels on weekly chart. The recent one (dark blue- Channel 3) has supported the price action in the most violent week, expect a rally towards upper end of the channel (No 3).