Technical Weekly 05012007

Base metals and oil stocks dropped this week, as copper and oil prices fell strongly.
The first chart shows the price of copper breaking down from a descending triangle.
The recent move was quite steep but the down-trend is intact and as you can see the short term target (around 230) is not yet reached.
Copper is often used as a reliable economic indicator because of its widespread production.

Similarly, the big drop in oil prices in recent months is raising concerns.
But technically speaking the Brent is another story, because it seems now that the long term up-trend (weekly chart) is ending.
A sell-off in commodities from copper to oil over the past few days could signal a slowdown in economic growth.
Yet, it seems that few investors have picked up on most of these (bearish technical) signals.















It is no surprise that the dollar is giving a boost from the falling commodities and the Euro-dollar is now retesting the recent breakout around the 1.29 level.
The last resistance is now becoming support and the Euro is still in the process of correcting its October/November rise.














Stocks have mixed performances as defensive sectors like Telecom and Health Care performed very well.
This sector rotation from commodities to defensives stocks needs to be monitoring closely because it could imply some important changes in portfolios in the coming weeks.
The table below shows a technical scoring from zero to ten points for all the Stoxx sectors based on different moving averages.
As conclusion, the trend remains very good for most of them but utilities, basic resources and oil&gas are deteriorating and heath care is strongly improving.















Finally, the German ten year Bund Yield is still trying to break above the level of 4% but short term indicators are overbought and some of them are already rolling over.