Technical Weekly 19062006

EQUITIES
Only 48% of the 600 stocks of the DJ Stoxx are trading above the 200 day moving average and only 11% trade above the 50 day moving average.
This last number is very low which means that the market is very oversold but the first one indicate that the intermediate term is still bearish.
I think that a sharp but short-lived rally is occurring because:
-The SP 500 (see chart below) declined sharply over thee last six weeks, but the pattern looks like a classic ABC Elliott wave correction and support is near.(1200) - from a contrarian point of view, sentiment is now outright bearish on US equities, which suggests that the consensus already widely discounts a continuation of the recent decline.
-for instance, bearish sentiment amongst US retail investors reached its highest level since April 2005.














COMMODITIES
Brent
Broke below the 67$ and the 50 day moving average, which means that I change our short-term bullish view to neutral.
I will watch closely the next major support, which coincides to the zone of the 200 day moving average and the ascending support trend-line in red on the chart below.

















Gold
Sharply accelerates to the downside and trades now close to the critical support around 550$ and close to the 200 day moving average.
Gold has now decline more than 20% in just five weeks!
I believe that a stabilization process around this level may occur in the coming weeks.
















GERMAN 10 YEAR YIELD
No clear signal at all. A flight to safety has supported bond markets over the last days and the German 10 year yield is still challenging an important up trend-line around the 3.9% zone.
On the other hand there is still a risk of seeing yields trading around 4.5% in the coming months.



















EURO-DOLLAR
Close to support zone around 1.25.(red line)
On the weekly chart, you can see that as long as support around 1.25 holds, the outlook would remain higher towards a test of 1.30, which is a strong resistance.