A World-Wide Bear Market

 

I may have been the one with the blinders on. At the beginning of April, in "Some Opportunities Overseas", I suggested that many investors were acting like horses with blinders on by not taking a look at foreign markets, inserted some charts with what looked positive trends and wrote:

"With all this doom and gloom [referring to our economy and the deficit] how could stocks go up and why should anyone put their money at risk instead of leaving it in money market accounts? Nevertheless, while there's a nice chunk of money parked on the sidelines, stock markets around the world have been gaining ground. If you're leery about the US markets, take a look at how constructive foreign stock markets have been recently. In short, foreign stocks, especially those in emerging markets, have convincingly broken out of a six-month consolidation (leading US markets) and are now forging ahead."

Instead of wearing blinders, I now a feel like nothing less than the other end of a horse. The Euro is sinking, the European Union economy looks like it's in shambles and China is looking to put breaks on their own real estate and economic run away economy. Today looks like the polar opposite of what we saw on April 2. Rather than the world's laggard economy, the US and $US now is touted as the world safe haven.

What appeared to be breakouts now look like heads on potential head-and-shoulder (or double-tops, horizontal channels or descending triangle) top formations in many of the world's stock markets. In many ways, they now look just as precarious as does the US stock market. Note how many of these indexes have crossed below their 200- or 300-dma's and that many of their moving averages have actually turned down. Also check out the OBV volume indicators (click on images to enlarge):

EWZ (Brazil)

FXI (China)

EWT (Taiwan)

EWA (Australia)

EWH (Hong Kong)

EWS (Singapore)

EWU (U.K.)

EWG (Germany)

PIN (India)

EWQ (France)

This is a world-wide phenomena. All countries around the world have run out of money, including the US. Anyone who thinks we will weather this and not be impacted must be living on another planet. Gold is quickly replacing the $US as the world's reserve currency (the store of wealth).