Thursday, April 18, 2013

A global market crisis in the making

A client writes: “In my opinion the U.S. stock market looks better than the markets in Europe.  As a German, I follow our market closely.  Please look at some charts from market leaders in Germany:

As you know, Germany is a export-driven economy, so looking these charts the world economy seems to be rolling over and more trouble potentially lies ahead.

My response: The rest of the world does look quite “toppy” from a stock market perspective.  China, India and Russia look very weak and so do many of the European countries.   Germany's DAX index is down 8% in the last month and looks very top heavy from a longer-term chart perspective.  Many individual stock charts from Germany look ominous.  

My best guess is that economic and financial market weakness in Asia, Europe and Latin America will eventually find its way to the U.S, just as the bear market and commodities crash of mid-1998 started with Asia, Russia and Latin America.   There are many parallels between '98 and today's market.

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