US equity markets have slipped over the last three days, pushing down through support that has held these markets in a range for over a year. Throughout this time we have kept a eye on all the major, minor and sector indices and the ones that have kept us out of trouble have been in the mid-cap area. Stuck in tight-ranges and generating occasional weekly-scale compressions, we have been able to use this to warn that strength should be sold and weakness bought, multiple times since March 2021.
On Friday, the S&P 400 (a mid-cap index) closed well down through the most recent weekly-scale compressions, indicating that the range has now broken and that a new downtrend has probably begun. This is borne out by the history of the small-cap area, where compressions formed across the beginning of 2022 which then broke downwards and have since provided resistance, as is usual:
This brings the US into line with European markets, which broke down from their own weekly-scale compressions in January, as reported and repeated many times here. An update, using some of the same instruments that we have shown before, including the Eurostoxx:
China, however, looks better. It has a different set of concerns from those of the US and Europe and the bottom extension that we reported at a daily scale (repeated now as a weekly, see second chart below) has held the decline and there is now a bounce in progress:
We advised selling the Soya complex short in the April 25th edition. All three component parts have dropped since then and now there is a bottom extension signal in the Soymeal continuation price series. This is a good moment to protect profits with either a close trailing stop or by simply covering. Prices are still very high, so we would slightly prefer the trailing stop as a tactic:
All signals generated by software produced by our friends at Parallax Financial Research www.pfr.com