There are a few new signals to report but nothing of major importance. The continued rallying tendency in stocks has now produced a solitary daily-scale top extension, in Singapore. Other markets, in Europe and the US have either been trading above recent compressions or have been making fresh compressions these few days:
All this must be set against the important background of several weekly top extensions in various equity market indices, most recently several in the US, as reported. Here are updates:
Still more alarming are the monthly-scale top extensions that have been occurring all year, again most recently in the US and now Japan as well. These are too imprecise to use for timing but they are a warning not to stay bullish for too long:
This means that we are inclined to be bears of the US and (some) European markets but that we don’t have a current reason to sell short - except perhaps in Spain. That will require top extensions or perhaps compressions that break downward, preferably on or very near a turn date. There are plenty of turns due in the next few weeks and months, so we expect a chance to take short positions reasonably soon. In the meantime, there may be further strength but we consider the situation to be too risky to advise taking long positions. Drops may start at any time.
The situation in commodities is slightly different. There we have seen daily-scale bottom extensions in some energy contracts, in copper and the precious metals and in our favourite commodity index, all reported to you. These are still just about ‘in date’ as I write and so the dip in some commodity prices in the last few days represents another chance to buy. There has also been a weekly-scale bottom extension in copper, so the rallying tendency in commodities generally may continue beyond the normal three week life of the daily-scale signals. Some updates: