Technical Weekly 19022007

Equities
Stock returns have remained highly dispersed last week (it is a stock picking market); this was largely due to earnings reports or M&A rumors.
On the other hand, market breadth in the US, measured by the advance-decline indicator, has been very positive this year.
So far bulls have remained in control of the market and were able to maintain the DJ Euro Stoxx 50 above the 4200 support level.(arrow on chart 1)

These contained short-term pullbacks prove that the overall trend remains strong.
Technically speaking, the Nikkei 225 (chart 2) index is breaking through its May 2006 high.

This is very bullish and further strength towards 18000 is on the cards.
The mid term target of the ascending triangle pattern is above 21.000 which is very impressive.
Unfortunately for European investors, the Yen is still caught in a bearish trend versus the Euro.
Finally we want the show you the mid term outlook for the DJ Euro Stoxx 50 according to the Elliott Wave theory and Fibonacci time projections.
The chart suggests that the final fifth wave will resolve in June around 4650.(7-8% upside).

Bonds
Yields were able to rebound on the 4% support zone but momentum is weak, which is why I doubt that yields will be able to rally above resistance in the coming days.
The resistance is 4.15% and our mid-term target remains around 4.4% in the coming weeks/months.

Euro
Last week I said that indicators were turning bullish for the Euro-dollar.
It is amazing to see that when volatility is very low, as Bollinger bands become narrower, the Euro is able to rally.
As you can see on the chart, in the past this kind of situation has often produced a new upside move.The short-term upside target is 1.326 and the mid-term 1.3775

Brent
The resistance line at 58 was too strong for the Brent and technically speaking the oil price performed a classic pull back to its established medium term downtrend resistance.
A retest of new low seen in January is a (strong) probability.