
How to Trade 8 Global Stock Markets Using 8 Technical Charts
Most stock markets around the world have been in rally mode in the wake of the terrorist attacks in Paris. And Jim Cramer talked about an oversold bounce on Monday.
The unknown outcome of the conflict with ISIS could cause downside market volatility. But during calm periods stocks tend to rebound.
Despite this volatility, investors should be focusing on the economic backdrop and the impact of global monetary policies. This afternoon, investors will be digesting the minutes of the Oct. 27 to 28 Federal Reserve Open Market Committee meeting.
The economic backdrop is not positive, which puts the focus on general monetary policies that continue to rely on monetary stimulus. Given weak economic conditions in the commodity-based economies of emerging markets, money-printing in developed economies has not worked. In the U.S., investors are focusing on the Federal Reserve's possible decision to raise the federal funds rate following the Dec. 15 to 16 FOMC meeting. But can the Fed raise rates in this geopolitical and economic environment?
The technical charts from around the world sort through this and suggest that monetary policy can no longer help stock markets to set new highs.
Here's today's scorecard.
Investors in the U.S. should realize that the five major averages are off the charts above their pre-crash of 2008 highs. Dow Industrials (DIA) - Get Report peaked at 29.3% above its October 2007 high, the S&P 500 (SPY) - Get Report at 35.5% above and the Nasdaq (QQQ) - Get Report at 82.9% above its November 2007 high.
The eight charts for the eight global markets imply that stocks are now stuck between their second-half lows and the highs set between November 2014, and July 2015.
Here's the daily chart for Japan's Nikkei 225.
Courtesy of MetaStock Xenith
The Nikkei 225 closed Wednesday at 19,649.18, up 13% so far in the fourth quarter and up 12.6% year to date. The horizontal lines are the Fibonacci Retracements from the high of 20,952.71, set on June 24, to the low of 16,901.49, set on Sept. 29. This decline totaled 19.3%.
The Nikkei 225 is below the price gap from the low of 20,033.29 of Aug. 20. Weakness on Monday held the 200-day simple moving average of 19,331.80, and the index is above its 61.8% retracement of 19,399.45.
Keep in mind that the monthly chart shows the Nikkei 225 is well below its all-time high of 38,957.44 set in December 1989. Currently this average is above its 38.2% retracement of the longer-term popped bubble at 19,195.41.
In 25 years, the Nikkei 225's near-term bull market moves have not been able to reach the 50% retracement is 22,966.96.
Here's the daily chart for China's Shanghai Composite.
Courtesy of MetaStock Xenith
The Shanghai Composite had a close of 3,568.47 on Wednesday, up 16.9% so far in the fourth quarter, and up 10.3% year to date. Still, it is in bear market territory -- 31.1% below the June 12 high of 5,178.19. The horizontal lines are the Fibonacci Retracements from this high to the low of 2,850.71, set on Aug. 26. Wednesday's close was above the 23.6% retracement of 3,403.55, and below the 38.2% retracement of 3,743.57. It is also below the 200-day simple moving average of 3,774.73.
The weekly chart for the Shanghai Composite shows that this index is significantly below its 2007 peak of 6,124, set before the crash of 2008. The 2015 crash is thus within the larger crash of 2008. The index is above the 38.2% retracement of 3,365 and below the 50% retracement of 3,891 of the crash of 2008.
Here's the daily chart for India's Nifty 50.
Courtesy of MetaStock Xenith
The Nifty 50 closed at 7,731.8 on Wednesday, down 2.7% so far in the fourth quarter and down 6.7% year to date. It is in correction territory, down 15.2% from its all-time high of 9,119.20 set on March 4.
The horizontal lines are the Fibonacci Retracements from this high to its 2015 low of 7,539.50, set on Sept. 8. The index is below its 23.6% retracement of 7,913.77, and below its 50-day simple moving average of 7,978.16.
Here's the daily chart for Germany's Deutsche Borse DAX.
Courtesy of MetaStock Xenith
The German DAX was trading at 10,931.63 as of Wednesday morning, up 13.2% so far in the fourth quarter and up 11.5% year to date. Even so, the index remains in correction territory, 11.8% below its all-time high of 12,390.75, set on April 10.
The horizontal lines are the Fibonacci Retracements from this high to the 2015 low of 9,325.05, set on Sept. 29. This index appears to be failing between its 50% retracement of 10,858 and its 200-day simple moving average of 11,070.
Here's the daily chart for S&P 500.
Courtesy of MetaStock Xenith
The S&P 500 closed at 2,050.44 on Tuesday, up 6.8% so far in the fourth quarter, but down 0.4% year to date and 3.9% below its all-time high of 2,134.72, set on May 20.
The horizontal lines are the Fibonacci Retracements between the all-time high and the 2015 low of 1,867.01 set on Aug. 24. The index is between its 50-day simple moving average of 2,011.94 and its 200-day simple moving average of 2,064.38, which was tested at Tuesday's high.
The index is also above the 61.8% retracement of 2,032.5.
Here's the daily chart for the Nasdaq.
Courtesy of MetaStock Xenith
The Nasdaq Composite closed at 4,986.02 on Tuesday, up 7.9% so far in the fourth quarter, and up 5.3% year to date. It is 4.7% below its all-time high of 5,231.94, set on July 20.
The horizontal lines are the Fibonacci Retracements between the all-time high and the 2015 low of 4,292.14, set on Aug. 24. The index is above its 200-day and 50-day simple moving averages of 4,958 and 4,885, respectively, and above the 61.8% retracement of 4,874.30.
Here's the daily chart for Dow Transports.
Courtesy of MetaStock Xenith
The Dow Jones Transportation Average closed at 8,058.30 on Tuesday, up 3.5% so far in the fourth quarter, but down 11.8% year to date. It is in correction territory, 13.4% below its all-time high of 9,310.33, set on Nov. 28, 2014.
The horizontal lines are the Fibonacci Retracements between the all-time high and the 2015 low of 7,452.70 set on Aug. 24. The index is below its 50-day and 200-day simple moving averages of 8,074 and 8,418, respectively, and between its 23.6% retracement of 7,890 and its 38.2% retracement of 8,161.
Here's the daily chart for the Russell 2000 (IWM) - Get Report .
Courtesy of MetaStock Xenith
The Russell 2000 closed at 1,153.21 on Tuesday, up 4.8% so far in the fourth quarter and down 4.3% year to date. It is in correction territory, 11% below its all-time high of 1,296.00, set on June 23.
The horizontal lines are the Fibonacci Retracements between the all-time high and the 2015 low of 1,078.63, set on Sept. 29. The small-cap index is just above below its 50-day simple moving average of 1,154.87 and below its 200-day simple moving average of 1,215.20. The index is between its 23.6% retracement of 1,129.77 and its 38.2% retracement of 1,161.59.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

















