- New Science in old markets -

Stocks still compressed – no resolution yet

There were fresh weekly-scale compressions in several important US equity indices last week:

Mid & Small cap + Nasdaq wkly comps

Naturally this means that the current range-bound condition of the whole market has not resolved, but it also a repeat warning that it will 'break' in one direction or the other soon. There have also been a few continued daily-scale compressions of course, as we would expect if the whole market is still compressed at a higher (weekly) level. Here are the mid-cap and small-cap indices again, now at a daily scale:

Mid & small cap daily comps

This means that any directional bet is at even odds and so you should be extra careful with any position here. We still have an outstanding 'short' recommendation in equities from the September 17th edition and we would tighten protective stops even more. The only remaining reason for holding on to this short is shown in the daily US small cap chart above. That index is re-compressing as it drifts lower. Very occasionally, this slight drift while compressing points to the direction of the eventual break. It is not as strong indication, buts strong enough to be worth holding on to profitablee shorts here, risking 'break even' at most.

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