- New Science in old markets -

US Equities re-test compression, so buy. China broke up too

The situation in US stocks remains the same – the outlook is for further gains as various indices climb up and away from weekly-scale compressions, as reported recently. There has also been a single daily-scale compression, in the NYSE composite, a few days ago and this too broke up and was re-visited in early trading today. Regular readers will know that these ‘re-tests’ of compressions are often good second chances to get into a trend that has already begun and we think that is the case here. Accordingly we recommend buying US equity indices ‘at market’:

NYSE composite comp

The Chinese market was breaking up from weekly-scale compressions as of the 22nd July edition and the market sustained those higher levels through the end of the week, so confirming the break.  Accordingly, we assume that you bought at the first available prices of the new week (today’s opening) are now long of the Singapore-based domestic Chinese index, to add to existing long positions in Japan and Korea. There is a complication however - the Chinese market went up strongly from the opening and then made a daily-scale top extension:

China weekly and daily

So, we have a good weekly-scale reason to buy but this daily signal indicates that a pause or a dip is likely. In such situations, the longer-term signal wins, so hold on to today’s new long position. We may advise taking partial profits quickly and would certainly do so if more strength occurs quickly.