Global equity markets remained at a crossroad

Some time back, I mentioned that all the major stock markets have broken below their 200-day SMA line, which could be the start of the bear market for equity (here). Shortly thereafter, I also pointed out that a surer but slower indicator is the negative golden cross, i.e. the 50-day SMA crossing below the 20-day SMA line as a confirmation of a bear market (here). Back then, only 2 markets have seen a negative golden cross, i.e. Shanghai & Hong Kong stock markets.

Since then, some of the stock markets have rebounded above their 200-day SMA line (such as the Singapore & Seoul markets as well as our stock market) while more markets have experienced the negative golden cross. Below, we can see that 7 out of a total of 17 indexes have witnessed a negative golden cross while another 4 experienced a negative mini golden cross (where the 50-day SMA line crossed below the 100-day SMA line).


Table: Main market indices as at June 25, 2010 (Source: Stockcharts for all indexes, except FBM-KLCI where I rely on Tradesignum)

Based on signs of renewed weaknesses on the economic front as well as continued weaknesses noted in the equity markets, I believe that one should not be over-exposed to the stock market.