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Monday, August 11, 2014

Market Outlook as at August 11, 2014

Over the past 2 weeks, European stock markets dropped steadily and a few of them broke below their uptrend lines. This can be seen among the bigger stock markets, like DAX, CAC & FTSE. The drop in these markets is probably due to poor economic data.

Business Insiders has a report which quoted Carl Weinberg of High Frequency Economics:

"For Euroland, the big picture is that the economy is in its seventh year of depression. On our estimate of a 0.7% contraction in the second quarter, GDP was still 3.2% lower than it was in the first quarter of 2008, when the depression began".
For more, go here.


Chart 1: DAX's weekly chart as at Aug 8, 2014 (Source: Stockcharts.com)


Chart 2: CAC's weekly chart as at Aug 8, 2014 (Source: Stockcharts.com)


Chart 3: FTSE's weekly chart as at Aug 8, 2014 (Source: Stockcharts.com)

Meanwhile, the US stock markets, which had dropped quite a bit over the past 2-3 weeks, are still above their respective uptrend lines. And that's because the US economy is expected to grow at 3% for the 2nd quarter after contracting by 2.9% in the 1st quarter. Some US economists feel that the growth is more sedate at 1% (here).


Chart 4: DJIA's weekly chart as at Aug 8, 2014 (Source: Stockcharts.com)


Chart 5: SPX's weekly chart as at Aug 8, 2014 (Source: Stockcharts.com)

Let's hope that the US stock markets will not join their European brethren by heading south. If that were to happen, then we could see a global equity market correction for the next few months.

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