We pointed out in the last (May 4th) edition that the Nasdaq weakness that started at the beginning of May with the downward break of a compression would find support at the level of an old compression, about 4% lower. That is still true and the market is now approaching that level, but there has been yet another compression signal. This has broken down so far today and it seems likely that the support we have identified, starting at 12984 in June Nasdaq futures and extended down to 12776 will be tested soon (13082, as I write). This new compression break might provide enough impetus to push through that support. We will advise.
Here is an update, using September Nasdaq futures, where the signals have all occurred:
Things look worse for the Nikkei. It has been compressing for two weeks at a daily scale and seemed to break upward last Thursday. We are aware of the dangers of a 'false break' from compressions, so did not warn of this development - too many other things were bear influences. Sure enough, the market has reversed and is breaking down today. More weakness is due and it could be sustained, as shown by the weekly-scale top extensions in the second chart below, which argue that the up-move is over:
In the April 20th edition we wrote of the likely up-move coming in crude oil. That has happened and the movement has been a classic 'break a compression, return to it, continue'. It remains unlikely that the up-move will travel far, as already pointed out in that edition. Here is an update:
All signals provided by software developed by our friends at Parallax Financial Research www.pfr.com