- New Science in old markets -

Financial markets all compressing – bottom extension in Cocoa

US equity markets are compressing again - mostly some sector indices but the Russell 2000 alos compressed on Friday. Ten year notes just made a new daily-scale compression and crude oil is also compressed. The $ index broke up from its compression (see the July 28th edition) but is still in a wide range and the DAX made a new weekly-scale compression last week. Charts of all of these will follow if anything interesting happens in the next few days. Don't get whipsawed.

In the meantime, Cocoa has been dropping. It has been in a bear market since April and has lost about third of its value. We have just seen a bottom extension which will probably mark the end of this downward leg hereabouts - the story:

Cocoa bottom ext2

We are tempted to buy this now, but the usual caveats apply - to avoid 'catching a falling knife' wait for some signs that the drop has at least paused before jumping in.

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