Market Trek

with Brian Whitmer

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  • Market Trek: “Magnificent 7” vs. “Magnificent 2”: Looking at You, ASML and LVMH

    Would you believe that over the past 15 years only two stocks in Europe’s blue-chip Stoxx50 index have driven 27% of the gains? The luxury giant Moet Hennesy Louis Vuitton (LVMH) and tech heavyweight ASML Holding NV (ASML) have dominated the European stock market. But how much longer? Watch Market Trek host Brian Whitmer as he gives you some Elliott wave-based answers.

    Hey guys, Brian here. Hope your week’s going great.

    We’ve all heard by now of the “Magnificent 7” stocks that are dominating the S&P in Europe. It’s not seven stocks. It’s really just two stocks that have been responsible for most of the gains.

    In this video, we’re going to look at these two stocks, because I think big changes are ahead. Stay with me.

    All right guys, welcome back. No scenery today. Video went a little long.

    The two stocks in question — LVMH and ASML — these two stocks account for 27% of the gains in the Stoxx50 since 2009. Two stocks out of 50, more than a quarter of the gains over 15 years. This is a concentrated market that we think is dangerous.

    Here is LVMH, the world’s largest luxury company, peaked nearly a year ago, textbook impulsive decline. The reason we’ve been so focused on this specific stock is because it dominates the luxury sector and because the luxury sector dominates many European indexes. I’ll just put up this chart for new subscribers that we showed last June.

    So eight months ago, this was just a couple months after the top and just as we completed that initial five down. We showed this long-term chart and we said, hey, this is a five-wave rise from 2008 and a reversal is likely.

    Now, as a wave analyst, I think this is the picture that should have been on the front page of every financial website. Of course, it’s not. What has made the headlines, if we go back to the near-term chart, the headlines are all about the luxury company snapping up properties on Fifth Avenue.

    In my view, the luxury mania is combining with a still-deflating mania in commercial real estate. None of these companies realize the trend has changed yet, and this is a dangerous environment for the bulls.

    Now here is ASML, Europe’s largest tech company. Makes all the photolithography equipment to produce semiconductors. Kind of looks to be about where the luxury sector was a year ago.

    The rise since ’09, fairly textbook five waves up. We have an extended fifth wave. This is a terminal wave pattern any way you look at it.

    We could see a few more new highs in five of five, but prices are bumping into resistance. In my opinion, not much upside left. And again, the bigger story here is how these two companies have come to utterly dominate the Stoxx50.

    So, food for thought here. I have a feeling I’m gonna be doing some updates on these two charts in the future. As always, subscription links below, if you want to follow our analysis in real time. And thanks for watching.

    At $50,000, is Bitcoin a “buy”? How about NASDAQ? Gold? Oil? Indian stocks? Chinese stocks? Discover what Elliott waves show for 50+ of the world’s biggest markets in our new Global Market Perspective >>

Brian Whitmer

Global Markets Strategist
Editor, European Financial Forecast

Brian Whitmer was a civil engineer in another life, so he’s got a good sense of how things are constructed. Applying that skill set, he deconstructs today’s sundry financial vehicles, like CDOs, meme stocks, subprime mortgages, SPACs, et al, and contextualizes them for his subscribers. He edits the monthly European Financial Forecast and contributes the European stock section of our monthly Global Market Perspective.

Brian’s also got a bit of wanderlust, so he gets a first-hand, boots-on-the-ground feel for what’s really going on around the world.

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