Turn update and more monthly signals
There is a cluster of turns due in US equities today, but none that show up in any other part of the world. This is a grade 2 cluster and naturally, any turn of this size should show up elsewhere too. A possible explanation is that it will just mark an interim point - perhaps a short-term high? There is also due to be a long-term Dow turn tomorrow, the 2nd October which we should obviously consider to mark the same event - this could occur either today or tomorrow. There are a few energy turns due today too.
Next, there is a grade 3 equity turn cluster in the US due on the 10th October, together with a bond turn. Soon after, on the 12th there are some currency turns together with some grains, natural gas and heating oil.
There are more grain turns due over the weekend 19th/22nd October and a long-term US bond turn due two days later on Wednesday 24th October.
Lastly for this month, there is another grade 3 equity turn due across the weekend 26th/29th October, with bond, currencies, grains and energy turns also due on that Monday 29th.
This is a messy picture with no remarkably large turns due in equities around the world this month, neither are there in November – we will send those details later this month. As ever, we remind you that turns work best when they coincide with extensions or compressions, both of which we only see as they occur.
There has been another top extension at a monthly scale in a US media sector index and another similar signal in biotech, arguing that the longer-term picture (in those sectors at least) is cloudy. We caution against trading on these monthly signals without some extra input from the shorter-term as they are too ‘broad-brush’ to be useful as a timing tool. They do give excellent warning of large-scale shifts in mood however, so we include them to give context:
Other new monthly-scale signals are compressions in platinum, copper and another semiconductor index to add to that already seen in the Philadelphia s/c index. Pressure continues to build throughout world markets:
Our most recent recommendation in equities was to sell short selected markets around mid-September, warning that this was yet another short-term recommendation. We have been keeping all advice short-term in equities since June as the Dow transport index has been compressing at a weekly scale since then, meaning that we have had no idea which way the next longer-term move might be. Compressions show that markets are on a knife-edge and so we waited. Now, as of last week, that same Dow transport index seems to have broken downward. We can only say 'seems' because it is still very close to the levels of the compression and we need a bit more weakness to see a clear break downward:
Still, this is enough for us to advise holding on to those existing shorts as any confirmation of a break down from here would result in further weakness. Keep stops reasonably close however - it would be a shame to let a profit turn into a loss.