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Chapter 28 Part III. Continuation - Stock Market. Page 6

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 27, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Major World Indexes Continued

    - DJ Euro Stoxx 50. This index includes largest 50 companies in EU and treated as a barometer not just of the German economy but economy of EU;

    - Hang Seng. This index belongs to Hong Kong and includes 34 companies from listing of Hong Kong stock exchange. These 34 companies own 65 % of total capitalization of Hong Kong stock exchange. In 2001 has appeared Hang Seng Composite index that includes 200 companies. This index as Nikkei is important barometer of Asian stock market.

    All indexes fall under some revision from time to time – some equities are excluded and replaced by new ones, for example due merger or acquisition procedures or bankruptcy as with Enron. Weights of stocks in index are also subject to change. There are a lot of other indexes that also important, such as Russel-2000, NYSE, AMEX indexes, some particular industry indexes – DJ Utility, DJ Gold, S&P Banks and others. You may investigate them by yourself.

    In fact, this is difficult to say what stands in advance and what is lagging – currency or equity. Since this is a cyclical environment they are feeling impact of each other and both are based on fundamentals. Here is the chart of Dow, S&P500 index and DAX-30. The close relation is obvious:

    Chart #3 | S&P 500, Dow and DAX, monthly

    Nikkei we’ve studied before that. Also, as you can see combination of different stock indexes is a subject for searching for divergences. For instance, during top of 1999-2000 the Dow has not supported a new high that was shown by S&P 500. This is a warning sign. Also take a look at bottoms of DAX. While S&P and Dow have shown new bottom in 2009, DAX has not. This could become add-on to possible bullish analysis of stock markets.

    Pipruit: Commander that is very interesting, but what about relation with Forex market?​

    Commander in Pips: Right, we’re too fascinated with that…

    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon.

    Note: FPA ranks are earned in the battles against scam, not in the classroom.
    #1 Sive Morten, Dec 27, 2013
    Lasted edited by : Oct 8, 2016
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