Technical Weekly 13022006

EQUITIES
The overall trend remains bullish especially on European and emerging markets regions.
The Russian RTS index for instance has risen 19.5% year to date, Brazil (17%) and China (17%) are not far away.
In the US, the SP 500 is now close to support and I think that the index may continue to trade sideways in the coming weeks.
Interesting moves last week came from sector rotation as I have seen the “oversold” telecom sector attracting bottom fishers and on the other hand, some profit taking were taken in the oil&gas and basic resources sector.
The graphic below of the Euro Stoxx 50, shows that prices are stabilizing around the 3700 level.
For several weeks, the index has been rising sharply and a consolidation is a normal process.A sharp decline seems unlikely because the “buy the dips” mentality still prevails for investors.




















COMMODITIES

Brent
Brent has corrected last week and the support line is now in danger.
Oil prices have fallen 9.4% this month.However as you see, the long- term trend is still up for the Brent.


















Gold
The pullback that I was waiting for is finally happening.
Tuesday’s sell off confirmed this view.
The first support is 545$ but I will watch closely the potentially bearish “right angle broadening pattern” (see circle on the chart below).



















GERMAN 10 YEAR YIELD
After a strong rise towards 3.5%, yields are consolidating and could retest the 3.37% level soon.(see arrow on chart)
Long term and mid term momentums are up and that is why I believe that a new bearish wave remains possible with a probability of further upside towards 3.7%-3.8%.



















EURO-DOLLAR
The Euro-dollar is pulling back below the 1.2 level but we expected limited downside potential from here because of the presence of a strong support in this zone.
I view this as a counter trend move and I think that the upside still prevails.
This is a weekly chart showing the breakout from a falling wedge pattern.