The iShares Global 100 (IOO) which tracks the S&P Gobal 100 Index, is essentially a picture of the global economy on one chart. It consists of 100 large cap international stocks. It is to the world what the DOW is to the United States. Several of its holdings are DOW components due to the dominant presence of the US in the global economy.
We can see from the chart that after a sharp recovery from March 2009 to Jan 2010, the chart has faltered and has retested break out level support at $50. We could test this strong support level again or trade at or near it for a period of time. A break below this support level would signal another global recession and a break below $40 would signal a global depression.
Economics is a progressive discipline, not a regressive discipline. Economies learn from past mistakes and become more efficient as time progresses, not less efficient. It is true that history seems to sometimes repeat itself as bubbles form and subsequently burst intermittently. However, this is due to the nature of human psychology, not ecomonics. Progress is cumulatively exponential in nature. The long term trend is always up.
Despite the intensely negative media reports, looking back 10 years from now, this could be the greatest buying opportunity of a generation.
