XU100 technical outlook

The weekly chart closed below 31500 last week, initiating a breakout pattern. We are in wave 5 of bigger wave A though and the support at 27500 should serve as a support short-term. It will be interesting to see if we can make it back above 31500 on a weekly closing (less likely). In case it could, we might have had the less likely chance of another zigzag correction building the right shoulder a bit longer but the principle outcome will be the same – markets will have a sharp decline going forward with a first target at 22000 but actually within 2 years we should rather drop to 10000 (even below).

The Turkish currency looks also vulnerable going forward and further losses of 15-20% are the best case we should expect. Turkey has 4 major economic sectors which are all about to deteriorate substantially. First is construction, which was a major boom for 3-4 years but came to a standstill already a year ago and hundreds thousands of built but not sold apartments and condos will soon have the same experience as most real estate markets around the world. Second was the banking sector, which pumped credit in every place it could find and financed it with carry trades mostly Dollar, which is already in the pain zone. Third, tourism with the world slipping into recession and the Russian billionaires loosing their pants that is due for deep contraction as well. Finally, the car industry with Turkey a major supplier for the surrounding countries will also face a steep set back.

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~ by behindthematrix on October 14, 2008.

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