*all charts, monthly, 20yr
Greece
Since the early spring lows in the upper 400s, the Athens index is close to having doubled up. If we can break over the big 1000, then maybe something important is going on. For the moment though, we do remain in what is a devastatingly strong down trend. Lets be clear, the Greek index is still down -85% from the 2008 peak.
France
The French economy is imploding, and the election of Mr Hollande has only sped that rate of destruction up. With the Government intent on blaming the econ-woes on the elite (rather than the chronic politicians over-spending), the rich are now starting to literally pick up..and leave. Who can blame them.
Only with a break >3750 could the bulls get justifiably confident on the French market. Considering the recent econ-data, it seems very unlikely we'll break out of the down trend.
A break <3000, should open the door to a collapse down to 2000, sometime next year, that would take the French market all the way back to levels not seen since 1996.
Germany
Germany remains the economic heart of Europe, and its stock market remains appropriately the strongest. The DAX is arguably starting to breakout, a move over 8200 would be exceptionally bullish for 2013.
So, those people who are bullish overall, look for 8200 on the DAX in the next few months. If that can be achieved, then maybe..just maybe its a sign the broader EU will actually hold together.
For the bears, they need a break <6000, which would open up a swift move to 5k. That would be a massive drop of 35% from current levels.
UK
My own country of the UK remains largely in the land of delusion. The general populace continue to believe that we have an economy that is 'soundly based', and given just enough time (and government spending), it'll all be 'just fine..just like the late 1980s again'.
With the Bank of England engaging in regular bouts of QE, the domestic currency continues to weaken, and underlying inflation continues to be a problem. With gasoline likely to hit $10 a gallon in 2013, living standards continue to decline.
Equity bulls need to breach the big 6000 level in the next few months, otherwise 5k will again be viable. 4750 remains the ultimate critical line, and if that fails to hold - for whatever reason, then a collapse wave to 3500 is again viable.
Hong Kong
A huge narrowing wedge..and we're going to breakout..one direction or another real soon. A move over 22k is bullish, sub 18k would be bearish. For the moment, the near term trend - like most indexes is UP.
Spain
Spain, one of the two ugliest of the PIIGS, remains a basket-case. With a lousy government, and a populace also in complete denial, they are headed the way of Greece. With tensions rising especially in the north, if the Catalonians go for independence, Spain will literally be falling to pieces.
Despite the strong bounce from the earlier summer lows around the 6000 area, it looks like we're seeing some strong resistance at what is a very price-clustering 8000 zone.
Only with a break over 9500 could I become bullish on Spain, and I find that near impossible to imagine. Primary downside target remains the big 5000, which is some 40% lower than current prices.
USA
Ahh yes, the Dow, which this week broke to new post'2009 highs of 13661. We're not far from the 2007 peak of 14198. With the Bernanke having made his QE3 move, its almost a little surprising we're not above the old nominal highs. Underlying econ' and political issues remain though, not least the looming fiscal cliff, and the debt ceiling.
The near term trend is most certainly bullish. Only with a break back below the monthly 10MA of 13k, can the bears start to wonder if something interesting this autumn might occur. So the bulls have a good 600pts buffer zone before they are in any trouble.
Even the most doomster of bears out there, the best downside target would be 11000/11500. I can't see any moves under than, certainly not any time soon.
Italy
The second ugliest of the PIIGS, Italy is very much acting in tandem with Spain. Just like Spain, Italy has seen a considerable bounce, but it remains in a very strong downtrend overall. Only with a break over 18k could I get bullish on this ugly mess of a nation state. A failure to maintain the current bounce, will again open up a natural drop to the 10k level.
Relative to Spain, Italy seems relatively calm, that's no doubt helped by the fact that at least 90% of their country is not a semi-arid desert!
Japan
The ultimate in deflationary basket case nations, Japan is still ticking over, but its doubtless going to suffer further troubles. Demographics alone portend for bad decades ahead, and the debt/GDP ratio is now somewhere around 400%. Such levels are not sustainable, and at some point, their currency will be in trouble.
China
The big question remains, is China a big bubble that is going to burst? The China market is still some two thirds lower than the peak. With the recent brief break of the huge 2000 level, some have already started to target the 1750 level.
If China can't comfortably start to pull away from the 2000 level, then it would be suggestive that as we move into 2013, there is a real threat the Shanghai composite will fall all the way back to the ultimate psychological support level of 1000.
Summary
Near term trend for most indexes is up. It is notable that the US/European indexes are seeing much stronger advances than in Asia. I'd guess that is largely due to the actions of both the Bernanke and Draghi. Both have literally talked up the markets, and both have done various measures to inspire some confidence that the system has plenty of liquidity. Not that its a liquidity problem though - as too few recognise, its always been about one of national solvency.
So, what about the Autumn?
Bears have a very difficult task. We're at the highs of the year, and there is still a very likely 'Santa rally/bounce' yet to come. Arguably, the bears have a very narrow window from mid October to end November to see a down cycle play out.
Best doomer case is indeed somewhere around sp'1200, but that just seems such a long way down right now. Yes, there is the fiscal cliff, the uncertainty that comes with an election, and I'd guess the US will see a further rating downgrade either late in the year or early 2013.
Will those things be enough to inspire a fast 15/20% sell off? I think there is a fair chance, but right now, I'd only give a probability of 20% or so.
As I've noted lately, the bears do have a few indications of trouble ahead. The transports remains weak, <5000, and we now have WTIC Oil <$90. Personally, I will start to get a little bearishly confident if we see a weekly VIX close >20.
I hope you have a good weekend.
Back on Monday.
