EUROPE: potential market turbulance ahead by mid-late 2014

Using OEW we have been tracking 8 of Europe’s most important stock market indices: England, France, Germany, Greece, Italy, Spain, Switzerland, and the hybrid STOX 50. In general, since the 2011 low in most indices, and the 2012 low in some other European indices, all of these stock markets have been rising. Over the past year, however, we have been noticing some fairly negative, and potentially completing, long term patterns unfolding.


England and Switzerland, in particular, have had very choppy patterns since their highs in May 2013.


In fact, the wave activity since their June 2013 low looks like a large fifth wave diagonal triangle.


While France has risen more than England and Switzerland in percentage terms, its 2014 rise also looks like a diagonal triangle.


To put these daily charts into perspective, we offer the cleanest long term wave pattern of the three: Switzerland. This long term pattern suggests the rise from 2011 has been a Primary C wave, of an ABC pattern from the 2009 low. This pattern, as well as many other foreign indices, look nothing like what has been occurring in the US. When these diagonals complete, these three indices should have their largest corrections since 2011. The charts of Germany, Italy and Spain support this potential scenario.


Germany has been rising in a five wave pattern since 2011. This is quite similar to the five wave pattern, over the same period, in the US. Recently it has been in a Major 5 uptrend since March. When it concludes it is likely ending Primary wave III.


Italy and Spain have been in similar bull markets since 2012. Italy appears to be in its last uptrend from that low.


Spain appears to require one more downtrend, followed by another uptrend to complete its five wave pattern.


When we review the Primary III pattern in the DJ World index, it look quite similar to Germany. Its Major wave 5 is not subdividing either. It skipped the US downtrend in April, just like Germany. Therefore, when this uptrend ends it should also end Primary wave III.

Overall we observe that Europe is aligning for a significant market decline in the second half of 2014. This appears to fit with our projected Primary wave III top, in the US markets by Q3/Q4 2014.

About tony caldaro

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31 Responses to EUROPE: potential market turbulance ahead by mid-late 2014

  1. Pingback: 061814 Wednesday update | STORMM

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  3. mjtplayer says:

    Thank you Tony for this great insight!

    It certainly looks like we will all need to work together in order to navigate the markets over the next few years (p4, p5, then bear market); it could be a rough ride…

  4. alexh110 says:

    Thanks Tony for this timely update.
    I notice of the top four economies in Europe, the charts for the UK and France are far more bearish than Germany and Italy.
    Spain and Greece also look relatively bullish.
    This should lead to a long-term narrowing of the wealth-gap between Southern and Northern Europe, and I wonder if this has any implications for the Euro?

  5. mharrison60 says:

    Thanks for your work and insights. Perhaps 1-2 months left in the tank.

    Are you expecting FTSE and wider European !markets to correct more or less than the US, for which I think you suggest 15+%?

    Much appreciated

  6. soulsurfer says:

    fantastic tony! thanks for sharing. since all international markets are highly connected these days, knowing what’s brewing on the other side of the big puddle is very important to know. Another reason why I joined OEW!!

  7. 11,500-12,000 min, but you’re forgetting that
    long term bulls (more frequent) typically have 3rd waves that
    are 1.618 X percentage gain of W1 as calculated:
    Targeting 17,135 DAX.

    7600 /3588 = 2.118 x 1.618 =
    3.4272 -> Low of W2 = 5000 X 3.4272 =

    Way pre-mature to announce a bear this early…going back to the 1800’s, each long term
    bull market 3rd wave, 3 out of 4 times have been the 1.618 X percentage gain of W1, Wave 3 (17,135 DAX, 3550 S&P)

  8. 11,500-12,000 DAX First and correction, 11500 -12,000 = 1.618 in DAX off the 1-2-3 2009 bottom lows..give it maybe mid 2015

  9. llerias7 says:

    How about $ATG?

  10. gtoptions says:

    Thanks Tony, great work on the European update. The calm before the storm.

  11. JK1987 says:

    SPX clears 1937, wave v underway to new high pivot 1973?;

  12. Lee X says:

    Thanks Tony !

  13. 16golfer says:

    Thanks Tony. Very helpful info. Time frame on completing Major V soon?

  14. rc1269 says:

    Thanks Tony, appreciate the Europe update. good stuff. cheers

  15. Hi Tony and everyone, greetings from downunder.
    I read your updates every day. Thankyou.
    As per your European report and your crystal ball, has ASX already seen its high? and how low could it go (or how much higher – maybe a test of the high of March? before it goes down, if it stays up waiting for US indices?)
    thanks again

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