- New Science in old markets -

The panic – is it over?

There has been much written in the press in then last 2 days about the flight to various 'safe haven' assets. These have included gold, government bonds and even the Yen which is by no stretch of the imagination 'safe'. All have pushed up in price at an increasing rate as fear of another banking crisis/economic meltdown/ stock market crash has grown. We have been calling for an end to this process and advising the purchase of some stock markets and the sale of these 'flight assets. In the case of gold and bonds, we have been early and the price rise accelerated instead of ending, but a review across all those markets that have risen in this panicky rush shows that yesterday probably marked the end of this phase.

US 30-year bonds made a top extension for the first time (notes already extended) and the further delivery months in gold futures did too.

Bonds & gold exts

The $/¥ made a bottom extension and so did crude oil.

Crude and $-¥ exts

Most of these markets (not the Yen) have given similar signals to these in the past few days but this is the first time we have seen all of them arrive together. We would continue to trade US equities from the long side - bearing in mind that a continuation of the present trading range is just as likely as a good bounce, try buying the German and UK equity markets on dips (we may add Switzerland too) stay short of notes as advised in the February 10th edition and would sell the Yen. It is likely that the short positions we advised in Gold were stopped out - we will re-visit the idea of selling short at another time.

We have an outstanding recommendation to be short of the $ by either selling the $ index or buying the €uro. This trade passed the profit-threshold three days go and we would expect to take half profits toward the close  tomorrow. Those profits can be taken now, in light of this new Yen signal, which points in the other direction. An update:

$ index & $-€ trades