In the second part of a series this month, we examine how major
stock indices globally are behaving during a time when US indices
are showing signs of exhaustion.
we identified resistance areas and a possible turning point in the
Global Dow Index
(INDEXDJX:GDOW). Now we turn to regional indexes, beginning with
Euro Stoxx 50 Index
The Euro Stoxx 50 Index includes 50 blue-chip stocks from 12
eurozone countries. It serves as the underlying for a variety of
futures and options contracts, as well as exchange traded funds
such as the
SPDR Euro Stoxx 50 ETF
Throughout the past year, Euro Stoxx 50 has obeyed the boundaries
of a Schiff channel that is remarkably similar to the one we showed
for GDOW in the previous article, despite the fact that the two
indices have only a little bit of overlap in terms of the stocks
they include. Price for Euro Stoxx 50 tested the upper boundary of
the channel late in 2012, and it is yet unclear whether that test
represented the completion of a large corrective move upward.
Economic factors would suggest there is little potential for stock
prices to go much higher in the eurozone, but unexpected news
events have pushed prices back and forth for several months and
could conceivably prompt a retest of the boundary.
Euro Stoxx 50 and the Global Dow seem to have taken the same form
during the whole long corrective move since August of 2011. The
Elliott Wave structures for the two indices fit similar counts.
Even the largest difference between the indices during that time
was minor. Where GDOW traced a substantial downward correction
lasting from August to November 2012 (the downward 'b' wave inside
the larger '(y)' wave), the equivalent correction in Euro Stoxx was
smaller. As a consequence, the move upward out of the correction in
Euro Stoxx also was more muted, and thus it has not reached what
normally would be the first expansion target at 2716, where wave
'c' would equal the Fibonacci ration of 0.618 of wave 'a.' It is
quite possible that index will fail to reach that target,
especially considering that it has already fallen away from other
types of resistance.
If the Euro Stoxx 50 Index falls from the current area, then the
decline should be of a similar magnitude to what was seen in the
index during spring and summer of 2011. It is yet too early to
attempt to calculate price targets for a decline.
This article originally appeared on
on the Mark