Technical weekly 09022007
Equities
The DJ Euro Stoxx 50 trades at the top of the three-year trading channel.
The long-term uptrend is still intact but positioned on the upper range of
this trend channel.(see chart below).
On a short term basis I still can find negative divergences between the price and indicators like the macd or the rsi.
All major indices all over the world are showing that same divergence in recent months.
This is a cause of concern because a trend consolidation should be expected according to this circumstance.
However, these kinds of divergences are frequent in long term bullish markets and what really matters is that the market is still making higher highs and higher lows.
I'm more prudent for the second part of the year.
That is because we are in a year that ends on a 7, traditionally bad years, especially the 2nd part of a 7 year.
Every time since 1900, the period between August and October of a 7-year was negative with an average decline of 13%.
Another reason is that according to the Elliott Wave theory, the stock markets are finishing a big 5th wave up. I expect them to hold up a few more months with media becoming more and more excited, but I will be extra vigilant in the second part of the year.
All major indices all over the world are showing that same divergence in recent months.
This is a cause of concern because a trend consolidation should be expected according to this circumstance.
However, these kinds of divergences are frequent in long term bullish markets and what really matters is that the market is still making higher highs and higher lows.
I'm more prudent for the second part of the year.
That is because we are in a year that ends on a 7, traditionally bad years, especially the 2nd part of a 7 year.
Every time since 1900, the period between August and October of a 7-year was negative with an average decline of 13%.
Another reason is that according to the Elliott Wave theory, the stock markets are finishing a big 5th wave up. I expect them to hold up a few more months with media becoming more and more excited, but I will be extra vigilant in the second part of the year.
Bonds
No major moves this week, but yields were able to rebound on the 4% support zone. The next resistance is 4.15% and my mid-term target remains around 4.4% in the coming week/months.
No major moves this week, but yields were able to rebound on the 4% support zone. The next resistance is 4.15% and my mid-term target remains around 4.4% in the coming week/months.
Euro
The rate continues to trade sideways between 1.29 and 1.3.
It should state above 1.29 in order to keep the outlook bullish.
On the other hand momentums indicators are turning bullish and the volatility
is very low.
In the past this kind of situation has often produce a new upside move.The short-term upside target is 1.326 and the mid-term 1.3775
The rate continues to trade sideways between 1.29 and 1.3.
It should state above 1.29 in order to keep the outlook bullish.
On the other hand momentums indicators are turning bullish and the volatility
is very low.
In the past this kind of situation has often produce a new upside move.The short-term upside target is 1.326 and the mid-term 1.3775
Brent
No change, the Brent is still trying to break the downtrend resistance line around 59.
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