Technical Weekly 19112007

Equities
Currently, a correction is in progress that is affecting all major indexes.
Hopefully, there are still some critical support levels that coud stopped the decline in the coming days/weeks.
While the market is approaching oversold/support levels, it is not as oversold as it needs to be, and more technical work is needed before I can have confidence that a solid bottom has been made.(DJ Euro Stoxx 50-daily)

There are some sentiment indicators that haven't yet reached extreme levels of pessimism.
The US Investors Intelligence poll of financial newsletter professionals for instance is still elevated, with the bullish reading at 53.8%.
So we need to monitor carrefully those important levels but I also think that the risk to the bearish case is exponentially larger if we broken down below those lines.
May be is the stock market, for the first time in a long time, sending a message that the economy is much worse off than was originally forecast.
The good news is that inflation is (not yet) a cause of concern (US PPI and CPI numbers released last week).
A sudden increase in inflation would be very bearish, but since inflation remains contained, the Fed has ammunition to continue lowering rates.
That should, in turn, lead to a strengthening economy in 2008.
But for now the short- term trend is still bearish and technically speaking it is still to early to buy.

Bonds

No change, a breakdown below August low (4.05%) would be very bullish for bonds.

Brent
The Brent has now reached all of my short term targets (the last one was 94$) and have started a short-term pullback.
The long term uptrend still prevails.(weekly chart)

Euro
No change from last week, long term bullish but very overbought as the rate is now trading in the top half of the rising channel on the weekly chart.
But for now I don’t see any bearish signal.