Traders/Investors could improve their chances of success by expanding the horizon of what they view. When it comes to trading national stock indices – take a global perspective. For example, if you trade one of the main US stock indices such as the S&P 500 (SPX), also watch what’s happening in other main national stock indices. The main Mexican stock index IPC Mexico (ME) has some fascinating bullish clues that could have consequences for the global stock market.
The daily IPC Mexico (ME) chart courtesy of Trading View illustrates its 2022 action.
Two important factors.
- The Mexican Economy is smaller than the US economy.
- Mexico is the third largest US trading partner. Canada is second, China is the largest.
Its logical to expect if there’s an economic downturn that the ME would top before the SPX. This didn’t happen. The SPX peaked on 01/04/22, the ME topped three months later. Subsequently ME made a bottom on 09/01/22. The SPX low was on 10/13/22.
In terms of retracement of the post March 2020 bull move, both indices are almost the same. The SPX 2022 decline retraced about 50% of its March 2020 to January 2022 bull market. The ME 2022 drop retraced close to 50% of its March 2020 to April 2022 bull phase.
As for the movement off the recent bottom ME resembles the action of the Dow Jones Industrial Average (DJI), both have retraced about 50% of their respective 2022 declines.
Several of the blogs on this site have noted the choppy nature of the SPX 2022 decline. The best Elliott wave interpretation for the SPX 2022 drop is a Double Zigzag corrective pattern. The ME also counts best as a Double Zigzag. Also note the ME steep rally off its recent bottom appears to be a developing Elliott impulse wave.
The ME, like the DJI appears to be on track to make a new all-time high before the end of 2022.