Technical Weekly 06102006

EQUITIES
The Dow Jones Industrial is now at all-time highs.
Bulls say this is good, and it is only a matter of time until the other indices follow. Bears have cited a lot of problems, including:
1) None of the other major broad-based indices is even close to an all-time high.
2) The number of NYSE stocks reaching a new 52-week high, the NYSE advance decline line and Dow Jones transport; all of them lagged the S&P500 during the summer.
3) The average Dow stock is actually 32% below its 2000 peak, meaning that the Dow was dragged to these high by a handful of stellar performers.
However, the fact remains that the Dow is at an all-time high and that most other indices have broken out to new five years highs.
These simple facts mean that the upside momentum is strong and therefore the charts of these indices remains bullish.The chart below shows the SP 500 reaching the target of the rising triangle around 1350.The last two candles are hammers which advice caution for the index, at least in the short term.



















COMMODITIES
Brent
No change, oil is still extremely oversold on a daily and weekly basis and I think a rebound may be coming soon.The mid –term trend is now down since August but on the weekly chart below, we can see that the 60-58 zone should provide support.




















Gold
No change from last week the ounce may continue to weaken towards the support zone around 550$ in the near term.A break below this zone will trigger an important long- term sell signal validating a double top bearish pattern.















GERMAN 10 YEAR YIELD
Breaking down from the strong support at 3.75%, it would need to sustain a close above this level to offset potential for additional downside.
Technically this looks like a big top pattern for yields, meaning that I'm now bullish for bonds.The target of the pattern is located around the 3.4- 3.35%.



















EURO-DOLLAR
Two weeks ago I said that: the euro should stay above support at 1.27 in order to keep the immediate outlook bullish and below 1.27 on the other hand, the downward risk would further extend to 1.25.The rate remains range bounded between 1.25 and 1.3 and volatility is very low, which means a big move may be coming soon.