Technical weekly 21092007

Equities
This week the SP 500 and the DJ Euro Stoxx 50 exceeded significant resistance zone in strong volumes.
As I said last week they are likely to extend their long-term uptrends and rise to another new all time high.
Very oversold sectors like banks and construction rebounded sharply but technically speaking we do not think it is time to overweight those sectors.
My favorite sectors remain food&beverage, telecom, Oil&gas and technology.
The rally in the basic resources sector is impressive but this sector is now very overbought.
The monthly chart below is the DJ Europe Stoxx technology.(chart1)

The index fell 86% from the peak to which it accelerated in the late 1990s before finding support near 143 in 2002.
Since then it has maintained a progression of rising major reaction lows in what has been a relatively gradual uptrend.

Since May of this year it has outperformed the Stoxx (chart2-black line) and is breaking above new high wich is a very positive event. (red line)

Bonds
The breakdown below the 4.2% support level was a bull trap for bonds holders and yields rebound strongly after they completed a TD Sequential low risk buy signal.(green arrow on chart).This event cancel my downside target of 3.7% and I have now an upside target of 4.6% for the coming weeks.

Brent

No change, long term very bullish. In the short term prices continue to trade sideways close to resistance zone.

Euro
The euro broke its long term rising resistance line at 1.4000.The rate is now overbougt but I think a target of 1.43-1.44 is likely for the coming weeks.