There have been a couple of new compression signals to report to you. Ten-year notes made a new weekly compression:
Both ten-year notes and thirty-bonds remain in the general area of recent daily-scale compressions too, although notes have been much weaker than bonds:
It is as if both the conflicting influences mentioned in the March 18th edition are at work. The start of tapering (and the threat of eventually rising rates) has pushed notes down a bit but the worry of deflation has supported the longer-term instrument. This odd divergence won’t last of course but it seems to be happening now.
Stock indices in the US and Europe are also still producing compressions. A Nasdaq index made a daily-scale version and apparently broke down but then another Nasdaq index made a fresh one. The same thing happened in the Eurostoxx. Its all very frustrating and we are unable to see beyind the next day or so. The strongest evidence af all is that the large equity turn due last Friday coincided with a high point in US markets. This keeps us bearish, for now. The pictures:
So stocks and bonds remain stuck in sideways trading ranges and our outstanding short recommendations in both have not produced any significant results.
Meanwhile, in commodity markets the main index that we follow made a weekly-scale top extension that coincided with a turn down:
This confirms our view that commodities in general are in the process of 'rolling over' after a bear market rally. It seems unlikely that this roll-over is yet complete and so there will continue to be some 'churning'. Commodity markets are only loosely correlated one with another and though it is probable that some will drop now, others have probably still further to rally. Cocoa, for example has just made a daily-scale compression from which it has started to fall (you can sell short here) but copper is still trying to rally from a series of daily-scale bottom extensions. We still have an outstanding recommendation to be long of copper which has a few more days of life in it: