Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19
Gold Price Gann Angle Update - 10th July 19
Crude Oil Prices and the 2019 Hurricane Season - 10th July 19
Can Gold Recover from Friday’s Strong Payrolls Hit? - 10th July 19
Netflix’s Worst Nightmare Has Come True - 10th July 19
LIMITLESS - Improving Cognitive Function and Fighting Brain Ageing Right Now! - 10th July 19
US Dollar Strength Will Drive Markets Higher - 10th July 19
Government-Pumped Student Loan Bubble Sets Up Next Financial Crisis - 10th July 19
Stock Market SPX 3000 Dream is Pushed Away: Pullback of 5-10% is Coming - 10th July 19
July 2019 GBPUSD Market Update and Outlook - 10th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

European Stock Markets Look Downright Scary

Stock-Markets / European Stock Markets Aug 09, 2014 - 12:12 PM GMT

By: Sy_Harding

Stock-Markets

Here’s the situation.

The economy of the 18-nation European Union is about the same size as that of the U.S., with roughly equal impacts on each other and on global growth. Germany, France, and the U.K. are the largest economies in the EU, and the fourth, fifth, and sixth largest economies in the world.


The stock markets of those major European economies have been tracking in tandem with the U.S. market for years, showing similar resilience, making new highs together.

They are still moving somewhat in tandem with each other, being in short-term pullbacks together.

However, while the S&P 500 topped out into its pullback just two weeks ago, and is down less than 4%, European markets topped out two months ago, and on average are already down about twice as much, and still declining. That has them still within the confines of a brief, normal, and overdue 10% correction.

However, in their pullbacks the major markets of Europe have broken beneath not just short-term and intermediate-term support levels, as has the U.S. market, but beneath their long-term 200-day (40-week) moving averages.

That is potentially ominous based on what usually happened in the past after similar breakdowns of long-term support.

The breakdown is blamed primarily on investors being nervous about the situation between Russia and Ukraine.

Let’s hope so, as reports on Friday were that Russia announced (for the second or third time) that it will pull its troops back from Ukraine’s border, and once again that provides hope that the situation is cooling off.

However, the real catalyst for the market sell-off in Europe is more likely that European economies have become seriously problematic again, which is potentially a longer-term problem.

For instance, first quarter GDP growth for the 18-nation euro-zone was barely positive at 0.2%, and Germany’s growth of 0.8% was the primary driver of that.

Reports are beginning to come out on second quarter growth, and this week’s report was that Italy’s economy slid back into recession in the second quarter. And in the last few days, it was reported that factory orders in Germany plunged 3.2% in June, after declining 1.6% in May. Indicating the weakness in the rest of the EU, Germany’s incoming orders from other euro-zone countries plunged 10.4%. Additionally, industrial production in Germany declined 0.5% in June, widely missing the consensus forecast of a gain of 0.3%.

Those dismal reports from Germany raise concerns that its economy may have been no better than flat in the 2nd quarter, raising the possibility that the overall eurozone slid back into recession. Meanwhile, retail sales in the overall euro-zone declined again; Moody’s rating services downgraded U.K. banks from stable to negative; and the economic warfare of escalating sanctions being imposed by western nations on Russia, and retaliatory sanctions by Russia, is not a positive for the economies of either side.

On markets, the pullback has European markets oversold beneath their short-term 50-day moving averages to a degree that should bring at least a short-term rally attempt.

Let’s hope that if U.S. and European markets are to continue moving in tandem with each other, that European markets can rebound quickly back above their long-term 40-week moving averages before the U.S. market follows them into breaks below its long-term supports.

However, as the intermediate-term charts show, that has not happened very often in the past once that important support has given way.

It seems clear that short-term bounces notwithstanding, it is still a time to be very cautious and defensively positioned on both the U.S. and European markets.

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2014 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Sy Harding Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules