Technical weekly 22062007

Equities
The chart below is an update of last week’s hourly chart of the DJ Euro Stoxx 50.
As you can see the confluence of resistances was to strong and the index fails to break above those lines.

I'm forecasting a more sideways market for the coming weeks.
In term of seasonality the period between May and October is often flat.
During these sideways markets, active management strategies offer the best potential in terms of risk/return.
For instance cyclical sectors remain very strong, health care very weak and the relative performance of the oil&gas and techno sectors continue to improve.
On the sell side real estate (EPRA index) has recently made a substantial bearish top pattern.
Last week’s bullish reversal in equity indices in strong volumes suggests that investors continue to consider pullbacks as buying opportunities but on the other way sell signals highlighted end May on the daily chart are still valid.(see arrows on the chart for the last three TD Combo hourly signals-amazing!).

Bonds
Last week I said that yields were very overbought and that a short term pullback was possible.
Now the pullback is underway (possibily towards 4.5%) but I still believe that renewed strenght should follow towards the technical target of 4.85%.

Brent
The Brent could soon challenge the 75$ resistance zone but this could take time as most momentum indicators are flat.
In the beginning of July, oil will enter in its best period of the year (from July to September)

Euro
The rate rebounds strongly on the support level.
The long term trend remains positive for the Euro and a break above 1.345 could trigger an acceleration towards new highs in the coming weeks.