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Stocks rally to first resistance. Gold extends, so does Corn

Stock markets have rallied since the bottom extensions reported in the last edition and are now pushing up against resistance from some older compressions. This is best seen in the Nasdaq chart below, but the next chart along shows that a fresh compression has just occurred in the US mid-Cap index:

Nasdaq in resist, MidCap compresses

Compressions mark moments of maximum uncertainty, so this fresh example means that you should protect profits on long positions taken a week ago. Bold traders may take profits and try a short in the Nasdaq here, relying on that resistance shown above. Don't risk much, as we still think that stocks are in a giant range.

The continued swirling uncertainty in world affairs that has caused so much gloom has pushed up gold prices, which have now extended. Gold can now be sold, with the proviso that there may be a bit more churning before the market decides what to do next. This is normal after top extensions.

Other developments (including a crop report) have pushed some other agricultural commodities sharply down and Corn has made a bottom extension. This drop seems to be an over-reaction to a mildly bearish report and so we would 'take' this signal and buy Corn. As ever, when buying on a bottom extension, it is wise to wait for some sort of confirmation before jumping in - in this case any sign that the market drop has paused will do:

Gold and Corn Extend

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