17/09/2011

Indexes uptrend continue. Downside tests are over for now.

Technicals
Dow, SP500 and FTSE all closed the week above weekly falling 8 MA signaling the downside medium trend is over for now and a test of the upside will now start. The 8 MA will be down week September 19 but then turn up as the technical picture looks right now. This means no short positions but continued holding of long positions. This uptrend can go on for a few months but I hope to guide you day by day.

Dax and Swed has done its five waves down and I think the uptrend will start now. IBEX, CAC and MIB will probably move up as well but the indexes does not show the strength as the first group, Dow, SP500 and FTSE.

The uptrend will not go straight up. It is more likely that this uptrend will be quite slow with the usual daily setbacks.

The most interesting index to buy for upside seems to be the Dax and Swed.

The first group have big head and shoulder tops to test. The 21 weekly MA will show this first resistance area. There are many hurdels or restistances on the way up.

There is always a risk that my predictions could to be wrong. As soon as I see a change I will write about it here.

Fundamentals
Euroland has decided to come up with a solution how to handle Greece in mid October. At the same time the Parliaments should also have voted on the 8 billion for Greece and the 440 billion to the fund which currently holds 250 billions.
Numbers for joblessnes, retailsales, GDP growth, etc. will continue to drop in. Currently all countries are close to zero in growth. The American definition for recession is two quarters with negative growth. This is the most important thing for the development long term of the stock market indexes. It is a slow process. Currently analysts are divided on the coming economic outlook.

My thoughts
The European debt crisis will disturb the markets now and then but quarterly company results are just weeks ahead and will have influences.
Regarding Greece my guess is the following. Germany wants to see a default of Greece. First the EU countries must be able to take care of their banks with big exposures to Greece bonds. I think that this is solved soon and money could be taken from the EU fund with its increased capital. Germany also wants to see an orderly default of Greece and give help regarding who should be hit by losses etc.
All this should be ready in mid October after one or more countries have voted no to give out the 8 billions and a new package  for Greece. Then the media will discuss the coming default which could take place before year end. The liquidity for banks will come from the ECB with help from the US Fed until the end of the year.
However when the markets understand this the focus will immediately be on Italy which then has the new boss of the ECB. How this will play out will be very interesting to follow.

If I am correct the indexes uptrend will finish around November, December and then the big fall starts taken the indexes below 2008 low. These are my thoughts right now.




  

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