Technical Weekly 29082006

EQUITIES
Last week I said that the short- term technicals were looking positive and that most indices were able to break above minor resistance.
Nothing changed this week but if you look at the chart below of the Euro Stoxx 50, you can see that the index trades now very close to the 3900 level, which is an important resistance level to watch.
What is new is the recent out-performance of the technology sector.
Most of the technology stocks are now trying to validate short -term double bottoms patterns.
Sentiment continues to remain at the same levels we have seen for the past few weeks.
Investor sentiment remains pessimistic and has avoided entering into the valuable unwinding phase.
For instance, investor optimism about the outlook for the U.S. financial markets fell in August to the lowest in nine months because of growing concerns about the housing market, according to a UBS AG poll.
The UBS/Gallup Index of Investor Optimism slipped to 53 in August, the lowest reading since last November, from 55 in July.
The index has dropped 40 points since reaching a 19-month high in January.
On a short-term basis, such persistent pessimism and recent high beta out-performance should continue to provide market support.













COMMODITIES
Brent
Remains weak, it is not clear if the short-term uptrend is broken but there is strong support in the 68$ zone.















Gold
The long-term uptrend remains intact (the 200 day moving average is still rising). The medium-term is neutral (triangle pattern).On the short –term basis a small bearish double top formation could be developing.

















GERMAN 10 YEAR YIELD
Last week I showed the monthly chart of the 10-year German yields testing a major downtrend-line connecting the highs of 1990, 1994, 2002 and 2006.
Today we look at 3 momentums indicators, a monthly one, which is positive but weakening and a weekly and a daily one, who are both bearish.
So, technically speaking I still think that this is a logical spot for bond prices to start doing better and bond yields (which move in the opposite direction) to start dropping.