The European markets began the decline to their August lows in early July, and were followed later that month by the broader US markets. The bounce off those August lows saw the DOW, the S&P 500, and the NASDAQ all reach new highs, and the major Europe iShares funds recover various Fibonacci percentage retracements – but not new highs. Since establishing their September highs the Europe IShares have continued lower, and while all the US indices except the Russell saw brief new highs, now as in the previous cycle, the broader US market is following Europe lower.
The support lines that I’ve been highlighting on the daily charts of the DOW, the S&P 500, the NASDAQ, and the Russell 2000 indices were broken in yesterday’s session. It is up to the 50 day moving averages to lend support to the first three, and the August low to restrain the Russell decline. A bounce is all I expect at this point, however, until there is a halt to the European decline and some signs of a reversal or basing process in those funds.
