Global stock indexes have captured an extremely turbulent political environment for global investors since late 2021, following a contentious trade war between the US and China. However, in early October, the lid was almost dry on what could be a historic international trade war. After weeks of highly public tension, the Chinese government suddenly disclosed that it would not pursue its threat to unleash a massive trade war that could crush US economic growth. Analysts expect that this announcement is meant to calm markets ahead of the Thanksgiving break – when trading will most likely resume. However, news of the imminent collapse of the Japanese economy casts a shadow over the world financial calendar, and free markets worldwide.
The sudden Chinese move comes on the heels of a similar announcement from the European Commission, which cited China as a significant market player that could cause a sharp slowdown in global trade. The Commission also implied that the slowing Chinese economy would eventually lead to increased rates of unemployment. European Union exports are set to take a huge hit as a result of the commission’s announcement, while the European Central Bank cut its official target rate for the euro to zero.
Global stock indexes are currently poised between great trends and extreme bear markets. With global tensions mounting, traders may expect further declines in the major global stock indexes over the coming weeks. Traders may expect continued US-European and US-Japanese economic growth, but they are expecting a more tempered reaction from the Asian markets after China unexpectedly devalued its currency last week. While global markets are poised for a sustained uptrend, there is a potential for large global losses should stocks and shares across the globe continue to fall on weak trading conditions.
In China, analysts expect that the government will continue to employ market interventions to stop share price appreciation. These measures have been seen as supporting share prices in the past, but the risk of over-leveraging via too many government-sponsored stock market trading hours seems to have become too high. Another possible adverse impact of the devaluation of the Chinese Renminbi (RMB) last week is the potential for traders to execute incorrect stop-loss orders. The rapid decrease in stock market trading hours last Friday may have been used by traders to execute massive buy-and-hold strategy that could have resulted in massive over-trading. It is not uncommon for traders to use their stop-loss orders as early as 8pm in the trading hours, but this form of stop-loss order can be very dangerous, as it exposes the trader to unlimited losses if the market suddenly begins to reverse.
Traders also need to pay close attention to daily chart resistance, as this form of market chart represents future buying opportunities. If daily chart resistance is encountered on a regular basis, investors may begin to expect the onset of a bearish long-term trend, which could result in a replacement downwards. At present global stock indexes are experiencing daily retracement levels, and traders should be prepared for them, as they could prove to be the prelude to a new uptrend. However, it is important to note that when stock markets reverse, traders will lose their previously held shares, as they will have sold to cover their positions at the lower price. When this happens, market participants will experience a reverse trend on their charts, and this will result in a loss for those traders who were riding on top of the reversal rally.
If a reversal in the market occurs, traders will need to act quickly to prevent a retracement away from the previous support zone, which will likely result in a new uptrend. Traders should focus on areas of the chart that appears to have a greater amount of consolidation in terms of volume, as this could indicate an uptrend. The main areas where traders will likely see consolidation of stocks include the previous breakout areas of the previous bear markets. By paying close attention to daily chart resistance levels, and utilising technical analysis tools such as moving averages and Fibonacci levels, traders can identify potential support levels for the current reversal in global stock indexes.
While some investors may view a correction in the market as the ideal time to make money by buying into stocks trading hours ahead of the retracement, others may prefer to wait out the upward movement in the market, to prevent incurring too much loss. A number of commodities such as oil, natural gas, silver, and copper can be bought in large quantities after a correction occurs, though these commodities tend to have short term price swings and so will not be the best choice for investors looking to ride the upward trend of global stock indexes. If investors decide to wait out the market correction, they may find that the gains from trading in these commodities will be limited.
In order to determine the market value of stocks, many investors use several different methods, including the Dow Theory and the FOMC. However, some investors prefer to calculate indices using less well-known techniques, such as the Alexander Elders technique. This technique is based on an analysis of world trade and how it influences the price of the stocks. To use this technique, an investor will need to obtain raw data from the trading floors of major corporations and then apply mathematical algorithms to the data. Once the algorithm has determined the price action for the stocks, it can be used to generate a range for the market value. It is important to note, however, that a more complicated algorithm may not be as accurate and provide a more reliable prediction of the future direction of global stock indexes.