Fallout So Far since the FED Decision

Stock Markets since Friday 18th peak to Thursday (TODAY) morning (US time), 24th September 

DJIA        16930 (peak Thursday 17th) - now 16070 = loss of 860 pts / -5%
NASDAQ  4450 (peak Thursday 17th) - now 4242 = loss of 208 pts / -4.8%
RUSSELL 1195 (peak Thursday 17th) - now 1081 = loss of 114 pts / -9.5%
DAX        10509 (peak Thursday 9th !) - now 9412 = loss of 1097 pts / -10.4%
NIKKEI   18770 (peak Thursday 9th !) - now 17570= loss of 1200 pts / -6.3%

 ALMOST FORGOT...
Gold is rallying sharply, now in its second week! Current price above $1152 the ounce. Since the low at 1055 it has returned 9.3%. Will it continue? Well, it may peak anytime in line with the ending of the faltering stock market. So if you are not in now, you are a bit late... may be wait till early November...

In my last blog I predicted a loss of 6-10% for the period after the FED decision to September 30th.  We are almost there percentage-wise though there are still a few more days left in September. That could mean one of two things: 
Either
  • we see the markets bottoming Friday in the US and Monday in Asia, followed - starting as early as Tuesday - by a strong rebound till early November (currently my preferred version);
Or
  • markets go down further still till Wednesday or Thursday next week, followed by a bounce that won't amount to much and/or be extraordinarily tough to trade.

Markets have indeed turned

Wherever you want to place the trigger for the current correction, the FED is not the right place. 

While the US stocks have been rallying for most part till mid-August, Europe has entered on a downward trend since April. Asia's sour grape period has been even longer: The multi-year rally in India's BSE SENSEX 30 ended in February 2015. The peak for the Australia's All Ordinaries and Singapore's STI was in April. Indonesian stocks are on a downtrend since March 2015 and its currency also suffered a severe loss of buying power. China's Shanghai Stock Exchange suffered its sharpest fall in June and August (and everyone blames China for their current misery), though Japan was the frontrunner in the August correction, starting off an acceleration of the global downtrend on August 11. 

It is obvious to me that since August, more selling pressure was heaved on investors globally and, succumbing to the downward trend, and the correlation between more markets increased dramatically. 

While there may be a reprieve in October, at this stage, I am hesitant to point out which markets could actually offer reasonable upside and be easily tradeable. That is mainly because I fear, markets did not bother to show any favour to the zero change in interest rates. "Mr Market" may well decide to go ahead of any FED decision and proceed with resetting some values in anticipation of a rate hike in 2016. I certainly don't think the FED will spring a surprise in December as market cycles still point South during that time. 

So, more losses to come, more 'Diesels' falling foul of emission levels, more car company heads to roll! It's a long time till February 2016...

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