Technical Weekly 16102006

Equities
The intermediate term picture remains positive for the equity markets.
In general, there is a lot of complacency regarding the stock market.
I see it in the low levels of volatility, the high level of bullish newsletters but mostly I see it in the media and analysts comments ; no one is calling for a correction, and everyone is mentioning how positive the market is during the last two months of each year.
The monthly chart below shows that the trend of the Stoxx 600 is up but overbought.For now, I would not consider taking a bearish position (selling equities) but will enjoy the bullish ride and stay with my long position.
















Commodities
This week, I want to focus your attention to the GSCI industrial Metal index (GYX), which is close to an all-time high.
Over the past 15 years moves in the CRB (black line) and GYX (red line) index have traced each other fairly well, at least until the past two months when the CRB has plunged and the GYX has headed higher.
Looking at the constituents of the two index the main difference is that there is no energy or precious metals components in the GYX.This seems to show that prices for commodities - ex energy and precious metals have held up very well and are not pointing to a sharp slowdown in industrial activity.
















German 10 Year Yield
Yields are trading above the 3.8% level but I'm not sure that this rise will continue.
On the chart below, we can see a lot of resistances at this level.
















Euro-dollar
The 1.25 level is an important one for the rate.
The weekly Macd indicator is already in bearish mode and volatility remains very low, which means a big move may be coming soon.I will watch closely this level in the coming days because a break below this level may trigger a rally for the $.