The “fundamentals” said a rally wasn’t possible – yet we trusted the contrary bullish Elliott wave pattern. This excerpt comes from the September 2024 Global Market Perspective.
Events in the Middle East have provided sentiment support for our wave counts—with the price action in Israeli stocks producing an unlikely leader of the new bull market.
Israel’s economy was already weak due to the 2022-2023 downturn in global stocks before the current war in the Gaza Strip. It has since incurred enormous costs—estimated to be as high as 10% of GDP—due to the ongoing conflict with Hamas and its Islamist allies … Trade with neighbors such as Turkey, which has boycotted all commerce with Israel since early May, has shrunk significantly. The nation’s only port on the Red Sea declared bankruptcy in July due to Houthi attacks on Red Sea ships.
A business consultancy forecasts that 60,000 businesses will shut down in 2024, compared to 76,000 during the coronavirus pandemic year of 2020. “There is effectively no sector in the economy that is immune to the repercussions of the ongoing war,” the consultancy’s CEO told The Times of Israel on July 18.
And yet, the iShares MSCI Israel ETF (NYSE: EIS) is now a leader of the rally in emerging markets. The monthly chart shows that the ETF trades above its 2008 high and has already retraced about two thirds of its 2021-2023 wave (2) correction.
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