an encore to the DAX blog

stoxx 600 june 6 2017rut june 5 2017

Here we have the Stoxx600 and the Russell 2000. Starting with the Stoxx 600 a case can be made that a near perfect flat was completed in early 2009, followed presumable by a simple 5-wave 5th wave that should make a new high to complete the sequence. All that is missing is a small 4 and 5. Time wise the drop in wave 4 and the rise in wave 5 are now almost equal.

Looking at the Russell 2000 the argument could be that a very large diagonal started much earlier in late 2002. The proportions sort of argue against this, so it is more likely that a simple 5-wave 5th wave started in this index also in early 2009. Alternatively an expanding diagonal could also be fitted in from this point. In both cases a small wave 4 seems complete and we are now in 5.

Regardless of what count applies, the conclusion that we are close to a peak seems to be inescapable. What is truly amazing is that both these broad indexes, one for Europe and one for the US are at these levels. Particularly the RUT 2000 seems to confirm the adage that “the sky is the limit”  which, by the way, also follows from the discounted cash-flow approach.

STOXX600, Europe’s best

STOXX600 febr 25 2015stoxx600 s febr. 2015

This is fascinating stuff. The STOXX600 represents the broadest selection of European stocks. All those names that everybody recognizes even on this side of the pond are in it. Bayer, Phillips, Unilever, Nestle etc. etc. are probable in there. I think it is a sell. Here are a few reasons;

a. We are up about 30% in the last 4-5 months.

b. We are outside the channel of the past 3 years, or arguable last six years.

c. There appears to be a seven year cycle between tops and bottoms, reminescent of the   Brenner cycle 7-8-9.

d. Soon the tops will connect, on a downward line proving that buy and hold sometimes does not work for 16 years.

e. RSI is getting overbought and MACD is turning.

f. If you were lucky to survive the first dive, and then the second dive are you in the mood for the 3d dive just as you are closing in on retirement?

g. Wave 5 looks very much like a wedge, not good.

STOXX600 update

stoxx600 july 7 2014 bstoxx600 july 7 2014s

Another potential c wave that is near completion. It has all the necessary attributes of a wedge, so perhaps it is one! Similar wedges are found in the IBEX and the banks within it of which we show only SAN, Santander below;

san july 7 2014

It is particularly interesting in that it has a perfect 2.618x advance from the low (where we recommended buying it!). This one probable already has a throw-over .

STOXX Europe 600

STOXX 600 june 20012

The Stoxx 600 index provides an excellent broad cross section of the European stock indices. The EW count , as shown, suggest that the next move would be a 3d wave down. Equally interesting are the performance numbers at the bottom of this Bloomberg chart. Year to date, that is the last 6 months, we are up 3.76%, but measured over the past year we are down 3.75 %. Over the past 5 years we are still down by about 50%. This is after an endless stream of interventions by central banks, the IMF, and other “regulators”, both in Europe, the US and elsewhere, covering the entire gambit of conceivable tools from direct equity participation to moral suasion and everything in between. On top of that there are, no doubt, dirty tricks being pulled off under cover of darkness and behind the scenes. Things that the English would judge being as not done or not cricket. The US plunge-protection-team comes to mind , never mind other nefarious operations that we have not even heard of.

    Someday, and it shouldn’t be that long from now, the World is going to wake up to the inescapable conclusion that all these government actions are little more than a display of ineptitude and impotence, all just an outlived economic fantasy. The so-called Greenspan/Bernanke put will disintegrate as we reach the point of recognition, usually the mid-point of wave 3, next on the menu.