In the last month, Russia (a.k.a. “the Lungs of Europe”) has come down with an acute case of financial pneumonia. Every effort to clear the airways -- from NINE shut downs of the Russian Trading System Index (RTSI) to $150 billion in cash infusions -- has been for naught. Moscow’s main bourse continues to choke, culminating in the code blue event of “Black Monday” (October 6).
The RTSI plummeted 19.1%, sending the market to a three-year low in its steepest one-day drop EVER.
“The mood is kind of disbelief,” observed one popular news site. “Traders are just sitting there staring at the screens and going ‘wow’.” (AP)
Not that we blame them. After all, at the start of 2008, Russia was widely hailed as the picture of lasting health, an emerging superpower whose ability to “decouple” from Wall Street secured it “immunity” from the economic contagion spreading across the West.
In a memorable speech at the World Economic Forum in late January, Russia’s finance minister boasted of his nation’s ability to “buffer against” a U.S. downturn. In his own words: Russia will “play the role of an airbag. I believe [we] will soon be the focus of attention as a haven of stability.”
It goes without saying, said “airbag” never opened. Its failure to do so, however, was hardly a surprise to Elliott Wave International's long-time subscribers.
(Bear Market In Moscow. In four months alone, the Russian Trading System Index has lost nearly one-third of its value. Only those who saw the rout coming can say when it will end. Check out EWI's October 2008 Global Market Perspective today. Act Now.)
While the mainstream experts saw Russia being insulated from the global rout, our analysts saw the nation being included in it. In the collision course with bear market forces, we warned: Russia would not be there to cushion the blow.
Almost a year ago, in the December 2007 Global Market Perspective, EWI's own Alan Hall presented a special, two-part study on Russia that suggested a major stock market top was imminent. Alan presented the following price chart of the RTSI since its inception (Some labels have been removed for this publication) and wrote:
“Our Elliott Wave count shows a clear five-wave advance that began in 1999 is near completion. The index should soon begin its biggest bear market since the pattern began. The minimum probable drop – a move into the area of the fourth wave of 2004 – would more than halve the value of the index.”
The 67% plunge in shares since then stands as one of the most powerful testaments to the accuracy of Elliott Wave analysis.
From the United States to the B-R-I-C economies (Brazil, Russia, India, and China) – this is, and always has been, a GLOBAL story. See the biggest moves BEFORE they unfold via a risk-free subscription to EWI's latest Global Financial Forecast Service. Click here to get started.