Update

As anticipated in last update in March, the market began a new upleg and reached new highs, in April. Then, after a couple of months of consolidation, prices started to drop sharply last week.

Let's have a look at the big picture. As illustrated below, the Swedish equity index OMXS30 is in a similar situation as in December, 2007. Prices then broke down out of the monthly Bollinger bands, and RSI (Relative Strength Index) reached the 45 level. As you can see, we have a similar sitiuatiuon now. In 2007, a bounce followed, then price dropped again, and reached a low when RSI reached the 30 level. Therefore, I believe we could see a short term bottom in the next two weeks, then a bounce up, before price fall again to reach the bottom of the triangle and RSI around 30, and price around 650 (depending on when it hits the bottom of the triangle).

Accordingly, I believe it's likely that we now are entering a global equity bear market, that could last 1-2 years, although at this point it's a bit too early for such an assumption.