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Is this the Begining of the end of the Bull Market?

|Includes:AAXJ, AGEM, CNY, DAX-OLD, EPI, ERO, EWG, EWH, EWQ, EWZ, FXI, HSXUF, IFN, OIL, PGJ, SPDR S&P 500 Trust ETF (SPY), UUP

The aim of this post is to take a technical view of the Global Markets and estimate how far markets can fall and if this correction extends into a bigger correction, taking us into bear market territory ( i.e below 200 DMA)

Summary

1.       Some key Global Markets are already below 200 DMA

 Chinese &  Hong Kong stock markets

 Brazil & France indices

(–  I haven’t taken other markets like PIIGs are most of them have already fallen 20% or so and are already in bear market territory)

2.       Most other markets like Germany, India , UK – are barely ( 2% to 4%) above their 200 DMAs.

3.       Mean reversion also shows markets eventually revert to their 200 DMA and even go below it after extended periods of remaining above 200 DMA. I had done a study on India`s NIFTY Index titled "Timing Exit from a Bull Market

4.        Most Global markets have retraced 2/3rd of their fall and are facing significant resistance and typically after meeting such resistance, the next logical support becomes  50% retracement level.

  1. Such a retracement will lead to most global markets going below their 200 DMA. 200 trading days would mean last month being mid July 2009 ( lower levels) and as we move ahead in time , the 200 DMA will rise at a faster pace as lower levels of last years are taken off.
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1) USD  vs EURO – USD very firmly in bullish territory - crossed above 200 DMA at 1.429 ~4 months ago on 18th Jan 2010
Earliest bearish signal of impending structural EURO weakness ( PIIGS) and potential impact of carry trades on stock and commodity markets.
USD vs EURO - 18-Jan-2010 when EURO broke below its 200 DMA
 
USD vs EURO – 18-Jan-2010 to till date

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2) Shanghai Composite – The other early bearish signal since Feb`10 and Mid-Apr`10 –when index broke below 200 DMA.
 
 Why we should watch China ? Chinese govt. gave the mother of all stimulus packages providing new loans of over $ 1.2 trillion or 25-30% of GDP in 8 months in end of 2008. Chinese market was the earliest to cross bull market territory- crossed above 200 DMA on 5-Jun-2009. Most other global markets followed months later such as US S&P 500 crossed 200 DMA only on 15-Jul-2009, at least a month later.
So China clearly lead the global stock and commodities rally.
Shanghai Composite –Cmp -2857 ( or 8% below 200 DMA)
50 DMA - 3042
200 DMA - 3090
Next Fibonacci support – 24% retracement at  2713 or 5% lower
 

All time high      5903
All time Low      1728
Range   4175
Fibonacci Resistance Levels       
24%        2,713
38%        3,315
50%        3,816
62%        4,317
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Crude Oil – Retraced from 50% Fibonacci retracement Resistance level at 90. Next support at 76- that also happens to be both 200 DMA and 38% Fibonacci retracement level.
At cmp , crude oil is just 4.5% above its 200 DMA

All time high      148
All time Low      33
Range   115
Fibonacci Resistance Levels       
24%        60.14
38%        76.70
50%        90.50
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HongKong`s HANG SENG Index
Cmp 20,327  ( or 4% below 200 DMA)
50 DMA – 21,186
200 DMA – 21,161
Next Fibonacci support – 38% retracement at  18,969 or 7% lower

 
All time high      30468
All time Low      11921
Range   18547
Fibonacci Resistance Levels       
24%        16,298
38%        18,969
50%        21,195
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S&P 500
Cmp 1165 ( 6.4% above 200 DMA)
50 DMA 1170
200 DMA 1095
Next Fibonacci support – 50% retracement at  1123 or 4% lower

All time high      1562
All time Low      683
Range   879
Fibonacci Resistance Levels       
24%        890
38%        1,017
50%        1,123
62%        1,228
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FTSE
Cmp  5341 ( just 2% above 200 DMA)
200 DMA -5230
Next Fibonacci support – 50% retracement at 5130 or 4% lower.
 
All time high       6730
All time Low       3530
Range   3200
Fibonacci Resistance Levels        
24%        4,285
38%        4,746
50%        5,130
62%        5,514
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French Index CAC
Cmp 3636 ( 4% below 200 DMA)
50 DMA - 3915
200 DMA - 3780
Next Fibonacci support –24% retracement at  3510 or 3.5% lower
 

All time high      6117
All time Low      2705
Range   3412
Fibonacci Resistance Levels       
24%        3,510
38%        4,002
50%        4,411
62%        4,820
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German Index DAX
Cmp 5958 ( just 4% above 200 DMA)
50 DMA – 6045
200 DMA - 5736
Next Fibonacci support – 50% retracement at   5867 or 2% lower
 

 
All time high      8067
All time Low      3666
Range   4401
Fibonacci Resistance Levels       
24%        4,705
38%        5,338
50%        5,867
62%        6,395
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Brazil Bovespa ETF
Cmp 67.2 ( 3% below 200 DMA )
50 DMA – 72.42
200 DMA – 68.9
Next Fibonacci support – 38% retracement at  60 or 11% lower
 

  
All time high      99.24
All time Low      35.16
Range   64.08
Fibonacci Resistance Levels       
24%        50
38%        60
50%        67
62%        75




Disclosure: Short : India NIFTY 50 Index
Stocks: SPY, AAXJ, EWZ, HSXUF, CNY, AGEM, IFN, EPI, FXI, PGJ, UUP, ERO, DAX-OLD, EWQ, EWG, EWH, OIL