- New Science in old markets -

New signals in equities but clouds remain. Copper and BTP signals

There have been fresh top extensions at a daily-scale in several US and European equity indices. These signals come at a time when other indices are pushing up from compressions, which is when we expect new uptrends to begin. The compressions:

Spain, It & Valug

Here are two examples of the very recent new top extensions, taken from the half dozen that have occurred:

S&P & MDax top exts

Top extensions may mark the beginning of a period of sideways price activity or an imminent dip. The most likely outlook is for some churning here followed by renewed strength but this is only a guess at the moment. We are watching carefully and will report the instant that we see any clarity.

Meanwhile there have been some other signals. Italian government bonds (BTPs) have made a daily-scale top extension at a time when the compression in US ten-year notes seems to be breaking upwards. It seems unlikely that these two instruments will move in different directions for very long, so we wait and watch here too. We prefer to try to sell BTPs short but this trade has cost many hedge funds substantial losses in the past year, so we would not risk much:

T notes & BTPs

Finally, copper futures have been compressing. There was a recent false break upwards that we did bot follow but prices then fell back into the tight range again and will soon make another break. If this is downward, we would follow with a short-sale, so if you see this happen please go ahead without further word from us:

Copper comps