East to West: Global correction

There are clear signs that global stock markets are headed for a correction.

South Korea’s Seoul Composite Index followed a false break above its November high of 2560 with a sharp reversal. Bearish divergence on the Trend Index warns of selling pressure.

Seoul Composite Index

Japan’s Nikkei 225 Index remains bullish but shows strong resistance at 24000.

Nikkei 225 Index

A large engulfing candle on China’s Shanghai Composite Index warns of a correction. Breach of support at 3400 would test the primary level at 3250.

Shanghai Composite Index

India’s NSE Nifty Index also displays an engulfing candle at resistance of 11000*, warning of a correction. Trend Index troughs above zero, however, continue to signal long-term buying pressure.

Nifty Index

Target 10500 + ( 10500 – 10000 ) = 11000

In Europe, the DJ Euro Stoxx 600 penetrated its rising trendline at 390, warning of a loss of momentum. Strong bearish divergence on the Trend Index warns of a primary down-trend. Reversal below 380 would strengthen the signal.

DJ Euro Stoxx 600

The Footsie retreated below its new support level at 7600. Reversal below 7300 would signal a primary down-trend.

FTSE 100

In the US, the daily chart for the S&P 500 reveals market skittishness about higher inflation and interest rates.

S&P 500

While Canada’s TSX 60 ended its 4-month rally with an emphatic red candle breaking support at 940. Expect a test of the primary level at 880.

TSX 60

This looks like a global correction but it would be premature to call this a market top.

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