Hey guys,
Another week rolls by with US equities maintaining their perpetual drift up style, ever narrowing bull market. Once again fresh price highs with very weak breadth again and with cyclical lead indexes providing non confirmation also. This appears to conform to all the classic text book end wave 5 scenarios with all risk being bid up but the number of stocks narrowing as broad indexes rise. (Another good year for index trackers as opposed to stock pickers appears likely in great part to this selectivity).
Lead cyclical risk like the transports, Asian indexes and some cyclical euro indexes like the Dax are seeing significantly more volatility in recent weeks. They have generally scored a good bounce in the last week and both Singapore and HSeng scoring new highs but the volatility is increasing with China as the volatility alpha. Commodities also scoring a bounce as the macro data remains positive and we look for direction across the $ basket.
As the team are on holiday lets take a look at a competing team’s work technical here across risk markets.
Here the CS team’s latest from yesterday:
The CS team here using a more classic set of price patterns together with chart trend skills and historic correlations to draw their conclusions. But they therefore miss the longer term cyclical and Elliot wave analysis that the UBS team include. My work actually therefore has a better fit with the CS team and as i look across the various asset classes I have almost perfect fit the CS team. A little too early to call the top here on commodity assets like copper yet for me and I did add to my Gold positions recently also.
Here Fitzpatrick rightly covering the flattening yield curve that i mentioned in last week’s report.
Traditionally the 2,10 spread a lead indicator for asset markets. We are not an pivot point as yet but we are getting ever closer it seems (dovish comments from the fed this week aside).
Seasonally we are heading into a positive period so this drift up could continue with non US assets taking over the beta even if the US$ drifts lower 2006 2007 style.
More to come guys as a V2.. The swiss team next week!
All the best guys
Rich