September 05, 2018.

Warning: Global Growth is Gone... What Comes Next Won't Be Pretty

The markets are getting downright ugly.

While US stocks have performed relatively well recently, globally things are looking worse and worse.

Germany’s DAX never reclaimed its former high established back in January. Instead it’s been carving out a massive Head and Shoulders pattern. Germany is the fourth largest economy in the world and heavily reliant on exports for growth. This chart pattern doesn’t bode well for global trade or growth.

1jpg

South Korea is another export-focused economy that serves as a bell weather for global growth. This is particularly true given its connection to Asia (China accounts for 25% of SK’s exports, while ASEAN countries account for another 14%).

South Korea’s stock market, the KOSPI, has lost its bull market trendline (blue line). It is now struggling to reclaim former support (red line). This again suggests global growth and trade have slowed dramatically.

2jpg

And finally there’s China: the second largest economy in the world, and the primary driver for economic growth in the post-2008 business cycle. Here again, we’ve lost the bull market trendline (blue line). And China has since been rejected at former support (red line) multiple times.

3jpg

Just one of these charts would be a warning to investors… but all three together suggest that global growth has completely crashed. All around the world, the peak was in January 2018... and since that time most markets have been in MAJOR downtrends if not outright bear markets.

There is a Word For What's Happening in the Markets. It's CONTAGION.

All around the world, things are getting truly UGLY in the financial system. The Emerging Market meltdown is now spreading into developed nations.

Spanish banks have loaned out $82 billion to Turkey. The Spanish stock market has now crashed through support and is ready to make new lows.

1jpg

It’s not just Spain… European financials across the board have ended their bull market and are now breaking into a bear market.

2jpg

If you think this can’t spread to the US, think again. The market has is about to test the downside of a rising wedge pattern. A break here targets the mid 2600s.

3jpg

This is the biggest risk right now in the market: CONTAGION. And those who allocate capital in targeted investments to profit from this shift will see truly MASSIVE gains!

Best Regards.

Deo Talaverano.

Chief Market Strategist DHF.

George Town. Cayman Islands.