QUESTION: Livio, it is becoming very obvious that we are headed into a recession here in Europe. I have never felt how ominous things seem as they do right now. Should I be worried?.
ANSWER: I know and am sorry it is getting ugly over there as I am focused on the political & economic crisis that is unfolding. Besides the government of Finland just collapsing out of thin air, we have the insanity of BREXIT, the EU trying to punish Britain in hopes of making an example of them to prevent anyone else from leaving, while we have the ECB unable to do anything whatsoever and the European people have become Draghi’s collateral damage. With leading economies starting to slow and key indicators in the risk zone, we are headed into a hard landing for Europe in 2020.
We are in a global recession that has been underway with economic growth rates running just a fraction of what they use to be decades ago. This global recession that others are just beginning to see on the horizon has been in motion. Our focus at this WEC will be how you can position yourself. So while others just see a recession emerging, as always, they will be unable to comprehend the real shifts within the global economy as a whole. We simply must approach this from an international perspective for China is also slowing but thank God they have rejected Quantitative Easing which I have warned is a complete failure.
Even the US economy has been gradually slowing since the 1950s. As taxes rise and the share of the economy government consumes keeps growing, they are starving the real economy and suppressing its economic growth rate. We are headed into a very hard landing. It has been the rise in taxes and regulation that is also behind the trend to automate replacing workers as much as possible.
The silver lining to this is that in the midst of this decline, you can at least temporarily shift your assets to the top market indexes in the USA as they will hold up the best over the coming months.
The EURO Next Move | EURUSD Long Term | EURUSD Winning Trend Trades
As you can see the Euro has been in a long-term steady monthly trend channel decline since 2008. (Monthly EURUSD Trend: BEARISH)
EURUSD Weekly Chart
The weekly chart below shows how the overall longer-term Monthly trend channel clearly illustrates that you can play the counter-trend (bullish) weekly rallies, but the momentum but you are fighting overall is the prior bearish monthly momentum since 2008. In fact, pricing closer to the upper end of the trend channel which is on a downward trend. (Weekly EURUSD Trend: BEARISH)
EURUSD Daily Chart
As you see the Euro has managed short-term recovery against the US Dollar after finding support at the 1.13 figure, but the move higher may will out of steam. The Euro was the top performing currency last week, gaining ground alongside global equity markets as risk appetite broadly rebounded. (Daily EURUSD Trend: CounterTrendBull)
Ultimately, the Euro has bounced back a bit, but as with any investment there will be volatility, so this was expected because of all the media targeting Trump right now so if we see the Euro finished the month above 114.27, then we can see the dollar pause into October with all the anti-Trump initiative taking place.
Once again the charts continue to prove that the Monthly overall trend overrides the weekly and daily below and our daily signals support the bearish stand.
So, for those of you who like a bullish EURO, a rally into October would most likely be followed by a solid and sharp decline, back into trend, thereafter into 2020.
As clearly illustrated, the Eurozone is clearly in a longer term currency decline and investors on the watch for a bear market in equities should keep their eyes on Europe.
“This animal is the sneaky sort and victims rarely see it coming,” said Charles Gave, founder of the Hong-Kong based asset-allocation consultancy, in a note to clients Wednesday. “If a bear market is to unfold, this will probably start outside of the U.S.” The likely starting location would be the eurozone, Gave said, where the single currency system “has now been destroying southern European economies for 20 years and local populations are increasingly unwilling to take the beating.” Gavekal Research
It will likely then spread to Australia, New Zealand, and the East.
Just to clarify for new readers, our traffic light style signals are simple. A Red Light means stop and sell. A Green Light means to Go and buy.
As you can see, myths about what is happening economically. More importantly, making money is not about listening to the TV gurus and their opinions. Its about leting the market tell you where and when to make money. For example the last few weeks the “Gurus” have been talking about Gold, Bitcoin, China’s Yuan, and the Euro. And while they have been, you can look at this and our member’s blog and we were telling you how to make money.
It is always puzzling to me when someone talks about Gold as if it unique and the only thing that will last forever. Sure, but I want to make money with it this year.
It is amazing to me to listen to someone who talks about Bitcoin as if it is unique and the future. Freinds were telling me it was going to a million dolllars per coin.
It was just two 3 years ago that all my associates were telling me that the Euro was going to replace the Dollar.
I was in a political argument with a colleague that was telling me how the Yuan was going to replace the Dollar as well.
Maybe all of them are correct in their assessments from a long-term point of view! but while they are bullish on those currencies, we are making money on the dollar:
This point is simple, don’t argue with your colleagues, follow the greenlights, make some money, then buy them a nice lunch and listen to them tell you more stories about what is going to happen to the dollar now.
Then just smile and go make more money following your InterAnalyst Traffic Lights Evergreen Strategy; Simply buy green arrows on any investment chart when the Daily, Weekly, and Monthly charts are in unison. Sell when they turn Red and Immediately find a new investment option within the InterAnalyst subscriptions using the evergreen strategy.
The German Update below represents the DAX. Similar to the S&P500 Index in the USA, the DAX index can help gage and guide long-term investors to efficient market growth. Our charts can help you take a three-step top-down review of how the DAX is performing and whether you should protect your portfolio against a pending crash. In addition, the charts can substantially help short-term trades increase their winning trades.
The monthly level of a market is where the long-term trend is defined. Let’s start by looking at a Monthly chart first fo find the markets actual Long term direction.
As you can see below, the Monthly chart went bullish in April 2016 (Green Light) and remains Bullish. Nonetheless, some caution is necessary since the last high 13596 was important given we did obtain one inter-month red light signal during January. Support still underlies the DAX at 12050 and a break of that level on a monthly closing basis would warn of a further decline ahead becomes possible. Currently, this market is choppy on a monthly basis but remains bullish.
On the weekly level, the last important high was established the week of May 21st at 13204, which was up 8 weeks from the low made back during the week of March 26th. We have been generally trading up for the past 4 weeks from the low of the week of June 25th. So, as you can clearly see, our German Weekly chart is also performing very and supports the larger bullish Monthly direction.
The daily level momentum and trend indicators within our chart remail bullish since July with a confirmed green buy signal.
German DAX Conclusion:
Based on reviewing the Monthly, Weekly, and Daily charts, the German market is broadly bullish.
*** Do not trade solely based on this post as it may not represent current market conditions. Markets can change abruptly.
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