Good morning Traders!
Traders often separate the global indices into two halves- the U.S. and everyone else.
The U.S. includes the Dow, S&P500, NASDAQ and Russel 2000 to mention the big ones, while outside the U.S. we have the UK’s FTSE100, Germany’s Dax40, Japan’s Nikkei, Hong Kong’s Hang-Seng, and Australia’s ASX.
The majority of the time, the markets tend to follow the U.S.’s lead, but more recently, and unusually, several non-U.S. indices have been marching to the beat of their own drum.
The FTSE has been testing all time highs over the last couple of months, even as the S&P500 hesitated about its next moves.
The DAX is almost back up its old highs.
This is noteworthy folks- it’s extremely rare in a climate of fears of a global recession to see such activity, and it should be taken as a positive sign. It implies that the economic situations may not all be that dire.
The ASX up near all-time-highs.
The U.S.’ S&P500 appears to be holding up well for the most part.
Is it possible that despite such quick recoveries and price much higher than the recent lows, that this could all be a misunderstanding by the market, and we’re about to fall off a cliff?
Here’s the thing about the financial markets- they’re usually forward-priced, always keeping one eye on the next giant iceberg or meteor heading our way. The more public and media-saturated the fear, the less likely it is to unfold exactly that way.
The monthly charts will provide the most clarity here- how price reacts at the old highs- do we get a ‘double-top’?
Big red candles would be signs of rejection and or failure, especially when they close near the lows.
So that means we’ll just have to more patient and wait for each month’s candle to close before jumping to any conclusions.
Statistically, it pays to be more optimistic about the markets than not- take inspiration from Warren Buffett and Charlie Munger- if they’re not overly concerned, then we probably don’t need to be either.