Technical weekly 07032008

Equities
In the medium term, equity indices remain in bearish trends.In the short term, most indices are caught in a trading range and are testing January lows. In the event of renewed panic selling, like in mid-January, I think that the correction could extend below this level.

However, I suspect they are trying to bottoming out in the coming weeks but for now the only bullish signal we have is the recent low risk buy signal made by TD Combo&Sequential (green arrows on the daily chart of the DJ Euro Stoxx 50).

The behavior of the index during the next meetings will inform us about this assumption.

If the market is going to successfully test its January lows, it needs to rally soon with good upside volume.

Bond Yields

Bond yields resume their downtrend and could reach the big support zone of 3.65% in the coming weeks.

A break below this level which correspond of the 61.8% retracement of the last bull move (September 2004-July 2007) would imply a downside move towards 3% for the coming months.

Brent

The recent breakout through the psychological 100$ resistance zone triggered an upside acceleration.

The target of the bullish broadening pattern is around 112-113$.

Euro

On the last weekly, I said that if the 1.5 resistance level were broken up, the exchange rate could reach 1.55-1.56.

I don’t change our scenario for this week.