We have been bearish about commodity markets for a while, as written in several editions in recent months – this is true for most of them (grains, say and cotton) but especially for the ‘industrial’ commodities. Now we have a signal to sell copper, for the first time since the prior bear move ended with a bottom extension in April:
That weekly bottom extension is still within the period of its ‘active life’ but we think it is trumped by the monthly-scale compressions above the market which led to the down-move in the early part of the year. These show that the market will probably continue weak for another year. Sell short and sell rallies back up to the daily compressions, if available.
Elsewhere, there is a compression in the Austrian stock market index:
This is obviously nor a major market but it is sometimes a bellwether for other Europeans – we can get early warnings here, just as we sometimes do from a few other small markets like Belgium and Finland. As you will know from editions written since mid-May, we are bearish about US and European stock markets generally and have advised short-selling the main US instruments and those from Southern Europe, including France. Now that this compression has appeared, it may indicate that we are about to see the beginning of the end-game in Europe, or at least the start of the next Euro-crisis. If this compression breaks downward, we will become extra bearish. If upward, we may have to deal with ‘one more rally’ before renewed weakness starts. We will advise.
As I write, US indices have just attempted to push through the highs made on our last 'turn day' the 4th June. We have advised re-shorting the US, using a penetration of the highs of that day as a reason to cover shorts and wait to sell again. The three main futures contracts have all approached the relevant levels but only the S&P500 pushed through, by a small amount. We would stay short until a 'good break' upward has occurred in more than just one of the S&P, Nasdaq and Dow futures contracts.