Major European Indices Near End Of Secular Bear Market

As the three above charts show, returns on the big 3 European ETFs have been essentially zero for the past 15 years.  This is typical of a secular bear market, zero return with extreme volatility throughout.  I think the picture going forward will be quite different.

Germany (EWG) is pushing up on resistance established at the 2000 peak, the breakdown period in 2007-08 which lead to the global financial crisis and the 2011 peak established prior to the European Debt Crisis.  We could see some more sideways movement before finally moving higher but I think the lows are in.

France (EWQ) is sitting on major support established in 1998-99, 2006 and more recently in 2011.  The United Kingdom (EWU) has a similar chart.  Both are sitting on key Fibonacci retracement lines.

https://en.wikipedia.org/wiki/Fibonacci_retracement

Barrick Gold Major Multi Year Support Holding

Barrick Gold has been one of the hardest hit large cap gold producers.  It has filled the headlines with huge write downs and corporate mismanagement.  It has found support that reaches all the way back to 1992.  I think these levels will hold.  A fast move back to $30 would not be surprising.

Canadian vs. US Financials

The distance between key technical support and resistance levels post financial crisis is and should be more notable in the financial sector than any other sector. In March 2009, it really looked like the Financial Select Sector SPDR (XLF), which more or less tracks the US financial services sector, was going to zero. It bottomed at $5.73 in March 2009 and currently stands at $13.44. It is currently trading in a downward fashion toward support at ~$12-12.50. If this support level breaks significantly, there really is no other significant technical support in between it and the bottom.

The iShares CSN S&P TSX Capped Financials Index (XFN.TO), which more or less tracks the Canadian financial services sector, appears to be in much better shape than its US counterpart but has the same support gap problem. Support exists around ~$19-20, but below that who knows? One would have to look back to 2004 to see a small trading range where some support may exist around $17.

I think both of these charts are going to be restricted to large trading ranges for months. The XLF faces tremendous resistance at $20 and will only break through it when a strong recovery is underway.

Market In Correction?

According to Investors Business Daily, the market has experienced a high enough number of distrubution days relative to accumulation days to make the liklihood of a correction in the US indicies likely. Depending on how today plays out, they may issue a "market in correction" verdict in their Big Picture column later today.

They may be correct. We could experience another correction. However, the intensity of selling this time is reminding me of the May 2006 correction rather than the 2008 crash. I think the downside this time is limited given where we stand currently. It will be difficult for the DOW and S&P 500 to spend a significant amount of time below their important respective psychological 10 000 and 1000 point levels. Any significant move below these levels, should bring in institutional value investors in addition to technical support buyers.