net-net, my friend contacted me a couple years ago and asked about European Banks and, in particular, the STOXX. it was hard to email him back because what I saw – which unfortunately was proven to be correct was a multi-year triangle that had been forming since 2009. it’s ramifications? well, the STOXX WOULD go to new lows and, more than likely, ACCELERATE the move lower because … that’s the nature of moves out of triangle. in my world of using crayons, I have no idea, nor do I care ‘what’ caused the market move one way or the other. there are ALWAYS a thousand reasons. for me, it’s a pattern that helps one manage risk and help one determine how much $$$ to risk and then pull the trigger.
Here’s the updated STOXX chart:
I went back and captured the daily chart showing the target zone … two years ago, chart below:
——————————————————————————————————————–06/09/2019 – well, from our point labeled ‘e’ it’s been straight down. From an Elliott perspective we are in another wave lower and it sure doesn’t look good for the home team. expect lower prices in the coming weeks, months. this doesn’t look good.
02/28/2019 – well, pattern recognition says you should always BUY or SELL the first AB=CD in an up or down trend. well, the STOXX Banks are almost there w/ regard to an AB=CD sell pattern. So far, the ‘thesis’ around a multi year triangle has worked which means, ultimately, this index will plunge to new lows lower than 20012. Is the next leg down upon us … if the PATTERN works, then yes. If it doesn’t we’ll CTRL-ALT-DEL and look for another pattern. HEADS UP OVER THERE ACROSS THE ATLANTIC!
05/29/2018 – well, it is certainly not looking good in Europe and, as I just posted, we could certainly be on the verge of a contagion.
Contagion: the ready transmission or spread as of an idea or emotion from person to person. “A contagion of fear” is what we are talking about …
So, you can see we have completed a ‘pattern’ in the 112 area BUT the candles are huge coming into this level so … expect this to give way but for right now, this is a very important line in the sand.
04/03/2018 – well, after roughly a year, the consolidation broke to the downside and as crazy as it seems, the triangle thesis is still a probability which is, to say it lightly, pretty darn bearish. So, would expect polarity come into play and former support becomes resistance. If we get back above that support around 126-127 then we’ll continue to evaluate. For now, that’s the resistance line in the sand where support now becomes resistance. Good grief … let me know if you have any questions. Man, that took a while to break down!
10/21/2017 – continues to consolidate. at present long term/large triangle thesis is still in play. key level remains 114.18.
*** important development. on the daily chart below a very ‘nice’ BUY pattern is appearing a little lower. IF this PATTERN FAILS THEN perhaps this will cause further weakness in STOXX and start to resolve the consolidation that has been going on for 6 months …
08/05/2017 – recent strength appears to want to take out the 139.67 high. However, the key levels still remain as shown below. A DAILY CLOSE above 144.28 will make me rethink scenario below. Hope this helps …
07/01/2017 – STOXX banks rallied into the target zone to keep the triangle (monthly) thesis alive. key levels indicated below on STOXX Banks and also the STOXX / US Banking Index. Hawk these levels for strength or weakness.
the KEY here is are we finishing a triangle and this latest leg up represents the final sequence (e) of a,b,c,d,e … the relationship that is giving me a ‘hint’ that this might be the case is the fact that the e is representing .618 of b-c (a common relationship in triangles) on the charts, that is the green line w/ .618 to the right of the green line.
also the ratio of SOXX banks / US Banks is presented. just because a sector might outperform on a relative strength basis does not mean it will go UP because it’s outperforming. in this case, it could mean it goes down slower … or, this move up is complete and US banks to outperform. however, because of the long term downtrend in STRENGTH of STOXX vs US Banks would monitor this closely. A continued increase and movement in STOXX vs US Banks ALONG with a consolidation or a breakout of the blue shaded box shown on STOXX Banks charts could mean important and notable strength has developed. Monitor the ratio for clues ..
Hope this helps and thanks for asking and visiting the site .. let me know if you have any questions.