Technical Weekly 0512

EQUITIES

In the US last week, the Semiconductor index (Sox) has broken up an important resistance through its summer highs. That is bullish for the market as a whole.
The Nikkei 225 closes over 15,000 for the first time in five years.
European stocks jump to highest level in four years, the Euro Stoxx 50 making a breakout above the 3470-resistance zone. (graph1)The bottom line is that I think the trend remains very positive for the equity markets.













COMMODITIES

Gold (graph 2) is trading higher again and is now above the 1987 peak.
Gold rose to a 22 year high as investors bought bullion as a hedge against inflation and as an alternative to stocks, bonds and currencies.
Oil rose to a three week high as falling temperatures increased consumption in the US, the world larger user.
Energy is trying to move back to the 58.3 resistance zone, which will mean the resume of the long-term uptrend. There are some technical factors supporting that view.
For instance, crude ended the week back over its 200-day moving average.Crude also bottomed in December of last year.














GERMAN 10 YEAR YIELD
The ECB raised its benchmark rate to 2.25% saying there will be no additional rate hike after this one.
The yield on the benchmark German 10 year bond continue to fall and is now approaching the 3.36 area.
For now,I still not believe that this correction will go below this support zone.
















EURO-DOLLAR
The market is assuming that the ECB won’t be hiking rates in the next couple of months.In the short term the rate continues to trade sideways between 1.17-1.19, but the long-term trend remains down.