The market remains in a downtrend, wreaking havoc on banks in Austria, Bulgaria and Portugal. Meanwhile, the euro reversed to the downside against the US dollar and is expected to continue lower over the course of 2014. The Euro Stoxx 50 is an index designed to provide a blue-chip representation of Supersector leaders in the Eurozone, but the crash of March 2000 and June 2007 made it extremely difficult for the blue chips to advance. The common understanding is that blue-chip stocks advance even in bear market conditions, but here the case is different.
The market appears to fail every time in making a new high. The March 2000 and June 2007 tops are connected with a trend line, showing the existence of a 14-year bear market in the Eurozone. All upward movements are nothing more than bear market corrective rallies.
The recovery from the 2009 bottom is a counter-trend movement. The waves’ character resembles corrective advance. The price movement is contained in a trend channel and fails to reach the trend line connecting the tops of 2000 and 2007. This failure sets the mood for a possible acceleration of the downtrend soon.
The stage is set for a near-term decline, having all the symptoms of a downtrend acceleration. The Elliott Wave labeling completes the situation at least for a short-term decline.
The Eurozone is softly said to be in a recession. The chart of the blue-chip stock index says all there is to be said. The long-term bear market shows no signs of slowing down in the near future. A serious depression may overtake the European Union soon.
