David Knox Barker
The cycles in developed markets such as the S&P 500 in the U.S. and DAX in Germany have recently had key cycle turns several months behind those in the emerging markets. This means developed markets may roll over to one more low, after the latest European debt intervention euphoria wears off. Investors and traders need to be tracking the cycles and the Fibonacci support and resistance targets to identify optimal entry, exit and stop targets in these volatile markets. The cycles in emerging markets may test recent lows, or even drop to new lows as cycles in the developed world put in new lows in the current cycle.
The global economy and financial markets are a complex system. The Internet bubble and the housing bubble in the developed world appear to have also juiced economies in the emerging markets beyond their natural stage of development. Although growing, emerging markets are not growing fast enough to save the developed world from their bad fiscal and monetary policy that has made the long wave winter worse than it had to be.
A strong rally in emerging markets from current cycle lows is expected. More trouble is then coming to emerging markets as exports to a developed world tank. The long wave winter will get a lot colder in the developed world and emerging markets next year. New lows are expected in emerging markets along with the developed world in 2012-2013. Following the coming bottom of the final business cycle of the long wave in the next eighteen months, emerging markets will lead international free market capitalism into the next long wave spring. A new golden age of rapid growth and prosperity is coming, but first we must pay the long wave winter piper for the global debt binge.