💥 WORLD ECONOMY: ...big drop is coming? 😡
Updated
Amazon rarely delays deliveries, but I ordered the crystal ball over 30 years ago and it still hasn't arrived! 😢😂 ...So, I don't know what will really happen in the coming months, but what we can do right now is try to make some considerations.
The chart above represents the DJ Transportation Index, an excellent "thermometer" of US economy. If we look at a monthly time frame, we see that a deep pullback appeared after a structure with "Wave 1 Extension", so we cannot exclude that it could happen again. At the same time however, we see that the Price Action has reached an important static support around 14,000, and only its failure could confirm a bearish leg with a first target around 11,000, obviously we are talking about a monthly chart, so to confirm this hypothesis, we have to wait until the end of the month.
In this historical context, many things could change in global economy, and the geopolitical situation is one of the main actors of this period. Inflation, the war in Ukraine, wide social gap, the dollar crisis, are all key factors that could still lead to uncertainty in the medium term.
INFLATION and THE PRICE WAR
We are well aware that a large part of the developed economy is struggling with rising prices, and even if inflation in the U.S. and in Europe it is driven by different reasons, Central Banks are using the same tools (are they wrong??) of monetary policy, , but something could change in the coming months. The most important Central Bank (Federal Reserve) could face a diabolical "pincer", because the danger of hyperinflation is the same as a potential stagflation.
Thanks for your attention.
A.B. ❤
The chart above represents the DJ Transportation Index, an excellent "thermometer" of US economy. If we look at a monthly time frame, we see that a deep pullback appeared after a structure with "Wave 1 Extension", so we cannot exclude that it could happen again. At the same time however, we see that the Price Action has reached an important static support around 14,000, and only its failure could confirm a bearish leg with a first target around 11,000, obviously we are talking about a monthly chart, so to confirm this hypothesis, we have to wait until the end of the month.
In this historical context, many things could change in global economy, and the geopolitical situation is one of the main actors of this period. Inflation, the war in Ukraine, wide social gap, the dollar crisis, are all key factors that could still lead to uncertainty in the medium term.
INFLATION and THE PRICE WAR
We are well aware that a large part of the developed economy is struggling with rising prices, and even if inflation in the U.S. and in Europe it is driven by different reasons, Central Banks are using the same tools (are they wrong??) of monetary policy, , but something could change in the coming months. The most important Central Bank (Federal Reserve) could face a diabolical "pincer", because the danger of hyperinflation is the same as a potential stagflation.
Thanks for your attention.
A.B. ❤
Comment
Another key element that could support this analysis is the "US Case Shiller Home Price Index" which could see prices contracting over the medium term.(Click & Play on Chart below)
Comment
...still bullish!
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