Trader’s Narrative

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Man does not live by bread alone.

And neither is the US stock market the only market out there.

But we usually tend to act as if it was the only one that counts. One of the many lessons I learned from Weinstein’s excellent book: Secrets for Profiting in Bull and Bear Markets, is to monitor global indexes. Cheesy title, but excellent book - if you don’t have it, get it today.

This takes on extra importance at important inflection points - which are difficult to spot in the moment, as you’ve no doubt noticed. While the US market is probably the most important in the world, due to the interconnectedness of our world, it can not decouple from the rest. So by comparing it to the others, we can gain insight into bull and bear markets.

So with that in mind, below is a (not so random) walk through the world’s major stock markets. First, let’s take a look at the European exchanges, then Toronto and the South American Indexes and finally, Asia.

Since looking at so many charts can be dizzying, I’ll keep tabs on a couple of specific technical criteria. For example, the slope of the moving averages as well as whether price is uptrending or downtrending (making a higher high and a lower high or vice versa).

FTSE (England)

• made a new low in March 2009 (still downtrending)
• yet to break above January 2009 highs
• slope of 200 day moving average is down
• 50 day moving average is below price & climbing

CAC 40 (France)

• made a new low in March 2009 (still downtrending)
• yet to break above January 2009 highs
• slope of 200 day moving average is down
• 50 day moving average is below price & climbing

Continue reading ‘A Walk Through World Stock Markets’

So Iceland is just one giant financial crater. To add insult to injury, someone even put the whole country on eBay. The listing was withdrawn because even eBay has standards.

Here’s a chart of the Icelandic Krona against the US dollar for the past few years:

There is nothing but doom and gloom in this tiny half-frozen nation. Just recently their 90th anniversary as a country was marred by protesters breaking into the Icelandic Central Bank. Things ended peacefully because, well, this is Iceland, after all.

But I can’t shake the feeling that this is actually an opportunity for a vulture-minded and deep-pocketed investor. There are many different ways to play an Icelandic recovery. I would avoid a straight play for government bonds or going long the currency (especially since there is little if no trading taking place).

Real estate would be a good alternative. Land isn’t going anywhere and neither will a building disappear. People still need a place to live, after all. Another possibility would be equities - blue chip stocks.

Argentina went through something similar in 2002 - although alone and unaccompanied by the rest of the world. But their currency did recover. From its deep slump, it rallied around 30% actually. And just recently has started to weaken again:

Of course, Argentina isn’t doing that hot right now. They were just getting back on their feet (or knees at least) when this new worldwide economic storm buffeted them again.

But I just can’t shake the feeling that Iceland will still be there a year from now, 10 years from now, and beyond. And someone will make a lot of money betting on that.

Talk about deleveraging. Markets all around the world are getting spanked. Brazil hit the circuit breakers after a 10% drop. Argentina’s MERVAL dropped 18%. Iceland is basically a very large crater by now.

But the real contagion that no one is talking about is the busting of the seaweed bubble:

No one has any idea what happened, eh?

Hmm… didn’t Alan Greenspan take a vacation in Indonesia recently?