 Hello and welcome to CMC Markets on Tuesday the 14th of October and the weekly market update. And here we are pretty much two to three weeks into October and the decline in equity markets appears to be accelerating quite quickly. Now, I think the big question that a lot of people are asking is we've seen these dips before. Is this particular dip going to be any different? And from my perspective, I think it could well be very different indeed because if we look at the performance of the German DAX, if we look at the performance of the US Russell 2000 and the Small Cap Index and we look at the S&P 500, there is some evidence that we could be seeing a significant reversal in sentiment. Notwithstanding obviously the fact that the VIX index has also had its highest levels in nearly two years, highest level since student 2012. So it certainly gives the impression that investors are becoming much more concerned about this particular sell-off than they have been previous ones. So why do I think this could be different? Well, there are a number of reasons behind that particular thought process. Obviously concerns about the German economy. We saw last week that the DAX lost more ground last week than it did in the entire previous quarter. We've also seen the IMF and the OECD downgrade their growth projections not only for the Euro area, but also for the global economy as a whole. And we've also got a factor in that the Federal Reserve will be ending its bond buying program at the end of this month. So if you take out the fact that we're getting reduced central bank support, there's little likelihood that the European Central Bank will be able to embark on full-blown QE even if it wanted to, given German objections to it. And concern about high valuations against that backdrop, then is it any one day you're seeing a significant amount of risk aversion? There are also a number of potential key turning or reversal patterns on the German DAX, the US Small Cap 2000 and the S&P 500. And I will be highlighting those particular charts later on in this video. We've also got concerns about falling prices. So that's probably likely that's probably going to feed into the bearish narrative as well because the reason oil prices are falling as sharply as they are is we've got an oversupply against a much more lower demand. So let's start with the US Small Cap 2000. Now with this weekly chart we can see, and this is a chart that I've been looking at for quite some weeks, so regular viewers of my videos will know that I've been watching this particular chart for quite some time. We've finally broken out of our potential double-top reversal pattern with that support level around about 1070 or 1070. Now if we project that move lower and the way we do that is we measure the height of the pattern and then project it downwards, that gives us a minimum price objective of around about 960. So the fact that we've pushed below 1077 means that we need to stay below 1077 to open up initially a move towards 1000 and then after that towards 960. We've also had a similar break lower in the S&P 500 and that can be seen by this daily chart here. We've broken below the 200 day moving average for the first time since late 2012 but more importantly we've also broken below the 1900 level. Now the 1900 level was particularly significant because it was it corresponded with the April highs and the August lows. So for me it was a very very important level in the context of the overall uptrend. Now the next support level on that particular index comes in round about the 1860 area and that's round about the May lows but in the overall context of the declines that we've seen across Europe the decline that we've seen in the S&P 500 is still very very small when compared to say for example the German DAX which I'm going to cover in just a minute. And to give you an indication of how small that decline in the S&P 500 is let's look at a weekly chart. Now we can see from this weekly chart I've drawn two trend lines on this particular chart. I've drawn a trend line from the 2009 lows which is the blue line and I've also drawn a trend line from the 2011 lows and we do appear to be closing in on that particular trend line from the 2011 lows and you can see that on the previous daily chart that corresponds with a sloping black line that comes in round about 1830, 1820. So certainly in the overall context of the declines that we've seen thus far it's eminently feasible that we can see further sharp declines in the S&P 500 simply because we are so far away from the 200 week moving average and inevitably as with any market that's overextended either up or down eventually the price has to come back to its mean which in this case is the 200 week moving average. So I certainly think the potential for further downside on US stocks is much higher than say for example on European markets and there's certainly potential for much stronger declines there as well which brings me neatly on to the Germany 30 or the German DAX. Now this particular weekly chart is a very good indication of why I think that we could well be looking to see further losses here. For most of this year the level of the support of 8,900 had been pretty pretty rock solid for pretty much all of this year. It has now broken it's gone it's behind us and it now what needs to happen is that we really need to get back above that to keep the bullish scenario or the bullish outlook intact. So we've broken below it using the same measuring technique that I used on the small cap index I've projected downwards and if this is a double top head and shoulders reversal whatever you want to call it then our minimum price objective is 7,700 projected down. So as we can see there's still plenty of room to move to the downside and that more than anything confirms to me that we have seen a significant change in sentiment and for that change in sentiment to reverse we've got to see a move back above 9,000 in the DAX and a move above 1080 in the US small cap index and a move back above 1900 in the S&P. So those are the three levels to keep an eye out for over the course of the next few days and weeks. So that concludes this week's weekly market update. Now before I sign off I'm just going to quickly remind you all about my webinar this week with my colleague Colin Sosinski in Toronto and we'll cover these charts in an awful lot more detail in that webinar. We'll also cover the other asset markets Euro dollar what are the outlook is for that what the outlook is for cable what the outlook is for gold silver crude oil so please feel free to sign up for it you can sign up along here it's half an hour it's three o'clock and it's on Thursday the 16th of October. Until next week thanks very much for listening.