DJ Euro Stoxx 50

The short term pullback may already be over.New low must hold.

If it does, wide trading range is expected with a lot of volatility.
Otherwise the downtrend will resume.

Matrice

La matrice ci-dessous est un outil stratégique (et pas du"market timing") qui me permet de quantifier le trend et le risque return des différentes classes d'actifs.En voici la légende : SXXP=Stoxx 600 Yield = taux 10 ans allemand M=métaux industrielles CRB=matières premières EUR= €/$ AGRI= matières premières agricoles.

Emerging markets

As you can see on this weekly chart, the MSCI Emerging Markets is right on support.
Most technical indicators I follow are still bearish and the last candle is bearish.
I will at least wait for a stabilisation before buying.

Fibonacci time cycles

Please find here a quick study of the SP500 about time analysis.(coming from Bloomberg)
This chart analyse the relationship between price and time using Fibonacci time projection.
By projecting cycle forward using Fibonacci percentages,(within Elliott waves analysis) you will find that most of the bottoms on the way up occurred within a couple weeks of the projection.
The next projected date in the pattern?
The end of April.

Marché baissier?

L'ensemble des différents indices boursiers sont désormais engagés à la baisse suite à la validation de figures de renversement baissières de grande envergure.
Les investisseurs espéraient beaucoup de surprises positives du coté des résultats de sociétés. Malheureusement après les mauvais chiffres économiques de ces derniers mois, ils ont eu droit à des déceptions.
En effet et même si on ne peut pas encore tirer des conclusions définitives, le rapport entre surprises positives et négatives déjà publiés incite à la prudence puisque 53.5% des sociétaires du SP 500 ont seulement réussi à dépasser les attentes.
D’un autre coté d’un point de vue technique les grands indices ont atteint nos objectifs et beaucoup de mauvaises nouvelles sont déjà intégrées dans les cours.
Bien que le marché d’actions soit fortement survendu, il sera prudent de ne pas négocier l'émergence d'un rebond technique avant que des signes tangibles ne nous indiquent l'arrivée d'un tel mouvement. Je ne veux pas prendre le risque d’acheter de façon automatique sur des niveaux prédéfinis et je préfère :
1)déterminer d'abord une plage de cours à la hauteur de laquelle des formations haussières sont susceptibles d'apparaître.
2) Observer ensuite si elles apparaissent bien, et si d'autres conditions sont réunies (chiffres économiques, résultats de sociétés…)
3) avant de valider le démarrage d'un rebond technique.
Le point 1 est déjà réalisé mais pas les points 2 et 3 et il est donc pour l’instant encore prématuré d’investir.(never catch a falling knife).

Technical Weekly 21012008

Equities
Last week was another bearish week for the market. It is now clear that the technical outlook remains bearish following the recent breakdown below key major supports. I also still think that technical bounces could start anytime,(see last weekly) because most indices are deeply oversold and sentiment is now very bearish. In these conditions, we do not think that the current downside move will be sustained. Nevertheless, it remains extremely difficult to time such technical bounces and even more dangerous to trade them, which confirms that the mid-term trend has changed. In a bear market, technical bounces are always surprising and often preceded by unexpected downside accelerations. So, due to the technical damage on long term trending indicators, we can not anticipate a major bullish reversal at this stage (even if we anticipate a sharp but short term rebound) and prefer to wait for a more significant bottom or at least a stabilization to start some bottom fishing. The long term chart of the Stoxx 600 presents a long-term view, which makes it more clear how serious the situation is. The questions remain as to how far down prices will go and how long the bear market will last? In the shorter term we have a minimum downside projection from the bearish descending triangle of 300-310, which correspond to the bottom of wave 4. That could mark a medium term low from which a bear market rally (wave B) could rise.

Bonds

Last week I said that a move towards the 4% was a high probability. This week, we believe a deep break below this level seems unlikely. For the coming months we can not exclude the possibility of a deeper correction towards the 3.65%.

Brent(Oil)

No change, the Brent is still correcting and a clear breakdown below the neckline (see arrow on chart) could validate a double top pattern. In this case the target of this bearish pattern would be 80$.

Euro

Start a pullback last week, this correction may continue towards 1.43. There is a strong resistance around 1.5.

Stoxx 600-Elliott Waves

The Stoxx 600 already broken his long term uptrend in September.
The target of the first bearish wave (wave A) is 12.7% lower, which is the bottom of wave 4.

Technical weekly 11012007

Equities

The new year on the US and European market got off to one of the worst starts in recent memory, with the SP 500 and the Stoxx 600 breaking below support zone.

Despite the amplification of the correction in the United States and the opening of bearish tendencies on the three principal indices (SP 500, dow Jones and the Nasdaq), the European narrow indices (Footsie 100, Eurostoxx 50, Cac 40, Dax 30) resist on or around their decisive supports. Currently, there is thus exists a dichotomy between the small and mid caps and the large caps which are overall considered as safe haven.Now that bearish tendencies were open on the three American indices, the realization of pullbacks bulls (which will come to reinforce these mid-term bearish tendencies) is foreseen at the immediate horizon. In Europe, the good resistance of the narrow indices during the American corrections makes it possible to think that many stocks are able to benefit from pullbacks and to rebound appreciably on a short term basis. That will not change their trend but will allow to sell under better conditions that in the beginning of the year.

The recent sector moves have been easy to track.

Investors have started the year buying defensive sectors (health care, telecom, utilities, oil majors) and selling cyclicals (auto, industrials, retail).

Bonds

No change, since May, the German 10 year bond yields are trading in a downside trading range. A move towards 4% is a high probability.

Brent(Oil)

The Brent has reached our target is still challenging the ascending support trend-line.A break below this support could extend the correction towards 90 $ but the long term trend is still up.

Euro

The recent correction was short lived and the rate is now close to challenge the 1.5 resistance level. As it is now overbought and close to resistance zone, I think that a more significant rise is unlikely for the coming days/weeks.

Bonds equities ratio

After 5 years of underperformance the European bonds-equities ratio seems to be bottoming out.
One more worrying sign for equities!

SP 500 daily

The chart of the SP 500 is now looking very dangerous.Even if the August low is not yet broken down , I think the risk is now very high to have another bearish leg.
The target of the descending triangle is 10% lower (around 1270).