SMI Swiss Stocks Weekly Chart Market Crash After Abandoning the Euro/Swiss Franc Peg

The chocolate, wrist watch, banking and insurance industries took a hit last week; these are the main industries of scenic Switzerland. The SNB (Swiss National Bank) lifted the 1.20 peg with the Euro/Swiss Franc creating a -10% to -30% drop in Swiss stocks as the currency pair went to parity at 1.00 in as heartbeat; a 20% move. The shocking move stopped a lot of hearts from beating. Forex traders that were leveraged on a trade with the currency pair immediately went insolvent. The SNB is the most reliable and trusted financial institution in the world and only one month ago said the peg at 1.20 would remain. Well, you just can't trust anyone these days. The credibility of all central bankers is now in question. The Swiss and all of Europe will descend further into deflation; which will likely be exported to the US.

The rising wedge pattern was ominous for the chart. Over the last two years the indicators are negatively diverged. Ditto for the price high from December into January so the chart was ready for a spank down anyway. Charts can only display all known information up to the current day. A shocker like last week will typically rattle charts but the SMI was topping out anyway. 

There is strong support at 7750-7900 so if price does not find support here another leg lower is on tap. The indicators hint at lower lows in price ahead so the 7250 support may be the next target. From the 9292 high last week to 7852 low is 1440 points a -15.5% drop. Perhaps it is time to sell the Cartier jewelry. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.