Technical Weekly 22012007

The market closed the week on an upnote.
The overall trend remains positive but the Dj Euro Stoxx 50 is now close to support.( see arrow on chart 1)
Momentum measuring by technical indicators are still bearish which means that the correction could go deeper.
In my view, this correction is likely here early in 2007, which should set up a better buying opportunity within an ongoing bull market.
The dispersion of returns for stocks is increasing, reflecting more volatility.
I believe the odds of further near-term choppiness remain high.

Oil continues to fall after US stockpiles surged and the international Energy Agency lowered its forecast for global demand because of warmer weather.
The next significant support for the brent is located around 47$, which correspond to a 50% retracement of the 2001-2006 uptrend.
The brent is now deeply oversold and I think that at least a consolidation and quite possiblly an oversold bounce could occur in the coming days.

The Euro-dollar is testing support around 1.29, I will monitoring closely this level in the coming days because we think the euro could rebound from here.

Yields continue to trade around the 4% level, the trend remains positive but most short term indicators are close to looking bearish.