Equities and bonds have both dropped sharply after the head of the European Central Bank said merely what was expected - that QE would last even longer and that rates were to be cut a bit. The drop has been particularly severe in bonds which bears out our view that these (bond) markets have a large hole under them. Stay short.
We said that we thought US stocks would continue to range-trade and this seems also to be happening - yet another failure at recent highs yesterday and now some weakness today. We don't have a 'firm' trading idea here yet so feel free to 'trade the range'.
We have advised taking long positions in several European equity indices and all have now dropped. The long positions were based on upward breaks of compressions, as reported in the November 26th edition and these compression breaks enable us to place tighter protective stops than usual. It is normal for the area of the compression to be re-visited before the price trend resumes but not for it to be penetrated. Accordingly, if any of these indices close below the relevant compressions, get out. We may also advise reversing into short positions at that moment. So far today, the Dutch index is trading below the compression low point, the MDAX is flirting with it and the FTSE is still finding support within the compression:
Yesterday was the tenth day of our recommended long position in copper. As we remind readers from time-to-time, there is a normal 15-day 'time out' rule for all trades. In commodity markets this is supplemented by an extra re-examination of each trade after ten days. If no trend has developed in favour of the position, get out. There hasn't been in copper, so you should be flat.