- New Science in old markets -

More compressions in US equities, $. Wheat update

There will be a slightly curtailed service for the next 5 business days due to limited internet access here in the Ionian islands. In the meantime there have been more compression signals to report in US equity indices - here are two examples from the Value Line and Mid-cap:

$valug, Midcap daly comps

Which fits our idea of a continued trading range. The range is becoming quite tight now, so these compression signals probably indicate that another move is due. Prices are at (or near) the upper boundary of the existing wider 7-month range, so elementary logic indicates that the next move of any magnitude will be back down toward the bottom end of that same range. We have learned from many years experience that compressions mark moments at which the market is evenly balanced on a knife-edge, so we are waiting to see which way these signals will break - an upward move is also quite possible, which in turn could merely lead to prices trading in a slightly higher range for a while. Patience.

Meanwhile, there have also been compressions in the main $/Euro rate and in the $ index:

Euro-$ & $index comps

So a new move is likely here too. We wait

Finally an update on Wheat, which we reported to be compressed a a weekly scale in the July 17th edition. That compression broke upward the following week (see second chart below) and the price has now returned all the way to the top of the year's range.We include the  daily-scale chart too to show just how compressed the market has been for the last two months, constrained as it has been by the conflicting influences of crop news and politics.

There is a good chance that prices will simply continue in this broad range and so fall back from hereabouts toward the lower levels again, but we are inclined to trust this weekly compression break. The signal is still young and this could be the time to sit on long positions in case the next bull market is underway. We will monitor closely and report.

Wheat comps update

All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com