The recent sell-off of a major Portuguese lender brought some early concerns to investors of a possible trickle down effect on global markets. In reality, the benchmark European index (Stoxx Europe 600) proved much more resilient than one of its smaller components.

Though the surprise financial health of one of Portugal largest banks brought a sharp sell-off to the Portuguese stock index this week, the overall affect on the broader European index proved minimal. The Stoxx Europe 600 pulled back only 3.20% this week (Chart 1).

The affect on global markets was non-existent.

The Dow Jones World Stock Index declined just 1.54% over the past week (Chart 2).

Bottom line: The market concerns from the recent sell-off of a major Portuguese lender are largely contained within the Portuguese stock market. Any negative spillover has been minimal and, for the most part, not been felt on other European markets.

The event has had no impact on the all-encompassing Dow Jones World Stock Index. The index remains in a bullish pattern of higher highs and higher lows.

By Donald W. Dony, FCSI, MFTA
www.technicalspeculator.com

COPYRIGHT © 2014 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present. He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms. He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

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