- New Science in old markets -

Equities still rising, $ is breaking upward

We remain bullish of equity markets, as advised in the last edition. We were only slightly bullish of the US market then, as the mid-cap indices were still making compression signals, which argued that they could still move in either direction. That doubt has resolved as they too broke upwards. The move is still quite a shallow uptrend and we still don't expect it to last long but here is an update to the charts we used to show the contrasting analysis:

compressions broke upward in both these US cases

It is worth repeating the reason that we think it unlikely that the rally in US stocks will persist for very long - it is because there were weekly-scale and monthly-scale top extensions in various indices, in the US and Europe. The bold type is because monthly-scale signals are very rare and mean that a long-established trend is on thin ice. Neither monthlies nor weeklies are much help with precise timing but they are a strong warning of an upcoming change. Updates, with weeklies first:

Weekly-scale top extensions in two US examples
These monthlies have been widespread for two months - these are just 2 examples

There has been a daily-scale compression signal in the $ index and in the $ against the Euro. Both are breaking in the direction of a stronger $. This will have many knock-on effects as $ weakness has become an embedded assumption across many markets in recent months. That will change. Buy $.

The lengthy period of $ weakness is ending

All signals provided by software developed by our friends at Parallax Financial Research www.pfr.com