Wednesday, May 9, 2012

Morning Market Analysis: BRICs Signaling Bear Markets and Recession

The Brazilian ETF continues to move lower.  The ETF topped out just above 70, but is currently trading at 57.57 -- a drop of nearly 20%.  The internals are decidedly negative -- all the EMAs are moving lower, and the MACD is dropping.

The real is in the same boat.  Prices were in an upward sloping channel, but moved through support last week.  The 19 level is very crucial -- a move through those levels would make the 18.5 level the most likely price target.

The Russian market is nearly as bad as the Brazilian market.  Prices have dropped below the 38.2% Fibonacci level and all the EMAs are moving lower.  The MACD has also given a sell signal.  The Russian market has almost dropped 20%. 

The Indian market was in downward sloping wedge pattern.  Prices have broken below support and are now heading lower.  All the EMAs are moving lower and money is flowing out of the market.  Prices have dropped nearly 20% -- almost good enough for a bear market.

The Rupee has been in a downward sloping channel for three months, dropping below the 200 day EMA.  The shorter EMAs are all moving lower as well.

After falling about 13%, the Chinese market rebounded at the beginning of April to the 50% Fib level.  However, prices have again fallen with the current price target being the 35.5 level.

The above charts all signal that the developing markets are in bad shape.  This does not bode well for the next few months.