The sharp falls overnight in commodities and some stock markets have produced a few bottom extensions. The equity market extensions are in South Africa and Canada and as both are dependent on natural resource exports, they fit the other signals. The most significant of these others are extensions in gold and crude oil – the others in silver, platinum and heating oil merely confirm them.
First the main commodity extensions:
There are also extensions in Platinum and an index of Gold mining shares:
Due to the escalating cost of extraction, mining shares have suffered more than the price of gold itself, so a rebound in the gold price will probably led to an even bigger bounce in mining shares. We have no signals (yet) in agricultural markets, where we have also been bearish, but these markets do tend to move in groups at moments of high tension so watch out for the possiblity of rallies in grains etc. too.
The South African and Canadian pictures look like this:
It may well be that an end to the weakness in Canada will have a positive effect on US markets too – the Nasdaq is now back down in support from these old compressions, which may provide a rally:
But these US markets have recently made both weekly-scale and monthly-scale top extensions (see a weekly example from the Dow futures above, right) which will inhibit rallies for many months to come. Although they have an active life of over a year, monthly-scale signals are too inexact to use for trading, so we rely on shorter-term signals to 'time' trades. We are looking for places to adopt strategic short positions and will advise when we think that moment has arrived. The most likely time for these will be at one of the turn dates published here last week, IF one coincides with an extension or compression signal. It is possible that we have already missed the highest point and we may only be able to catch a subsequent high.