There are a large number of market turns that were due yesterday. We expect to see this at the start of every new year and sometimes dismiss this phenomenon as the normal 'reset' that occurs after the long Christmas period when volumes are usually low. There are many more turns in the New Year Cluster this year than normal and so it is worth paying closer attention to what it might mean:
- The markets were mostly closed yesterday so the turns are more likely to come today.
- There have been rallies in European and Asian equity markets (and today a rally in the US too) so this turn probably marks a high point - we will know more in the days ahead.
- The turns are spread across equity, bond and commodity markets - there has been quite strong correlation between these assets in recent times so it would not be a surprise to see them all turn at the same time. FX is not well represented in the turn cluster
- There are a few new top extensions in European stocks (in France and Germany) which reinforces the idea that equity markets are making a high point here, as long anticipated. More on these signals in a later edition of HEDLines