Sunday, October 10, 2010

American Index Chart Patterns – 5 year charts

The long-term American index charts are showing contrasting patterns. While the USA and Canada are struggling to get back into a bull market, having barely crossed the 50% Fibonacci retracement levels of their bear market falls, Mexico and Argentina are trading at all-time highs. Brazil is less than 4% below its all-time high.

Here are the 5 year charts of some of the American indices.

S&P 500 Index Chart


The S&P 500 index chart has crossed the hurdle of 1150, and has closed above the flat 200 day EMA. The Apr ‘10 closing high of 1217 has to be crossed convincingly for the bulls to regain some control. The Oct ‘07 closing high of 1565 is way out of sight.

Canada TSX Composite Index Chart


The Canada TSX Composite index chart is in a slightly better shape than the S&P 500 chart. The Apr ‘10 top has been crossed, forming a bullish ‘higher tops and higher bottoms’ pattern. The Apr ‘08 closing high of 14321 is almost 1800 points away.

Mexico IPC Index Chart


The Mexico IPC index chart is at an all-time high, and it looks like it isn’t done yet. One of the best performing markets not only in the Americas, but worldwide.

Brazil IBOVESPA Index Chart


The Brazil IBOVESPA index chart is still 2700 points below its May ‘08 high of 73517. It may be a matter of time before the index reaches a new all-time high. In spite of all the noise about the economic growth of the BRIC countries, the Brazil index chart hasn’t quite made it to the top of the heap – though it is one of the better performers.

MERVAL Buenos Aires Index Chart


The Argentine MERVAL index chart gets the gold medal amongst the American long-term charts. Quite a comeback for a country that was in a state of economic turmoil and high inflation just a decade back.

Bottomline? The 5 years US and Canada index charts are showing the effects of over-leveraged economies and debt mismanagement. Mexico, Brazil and Argentina index charts are faring much better and are among the best performers world-wide. Booking profits in Mexico and Argentina and deploying in Canada may be a good contrarian play.

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