By Dominic Picarda, 22 February 2012
EQUITY INDICES
Caution is the watchword at this stage of a rally. At the early and middle stages of a strong move higher, you can often jump aboard pretty much whenever, knowing that the tide will carry you higher soon enough. Later on, however, more discernment is called for. When the indices are high and near overbought, the potential for spills is that much greater. And that’s where I believe we are now.
Yesterday’s dip took several of the indices to just around the levels where I was seeking to buy. And that remains my bias for today. I would like to get involved on the long side around the end of pullbacks. I continue to be drawn to the Dow in particular.
Click here for analysis of some leading equity indices.
COMMODITIES
Things are getting interesting again in precious metals. I have been looking for gold and silver to try escape upwards out of the ranges in which they have been stuck for most of February so far. They made a convincing start to this process yesterday, at one stage flirting with their highs from the beginning of the month. One swallow does not a summer make, however, and I need to see a bit of follow-through now. Inconveniently, both are pulling back sharply this morning, as the US dollar comes back to life.
If they can hold a decent chunk of their gains from yesterday and rally anew, I will be looking to establish long positions here. There is plenty of upside potential in each case. Meanwhile, I am still an oil-fancier right now, despite crude looking increasingly stretched.
Click here for analysis of some leading equity indices.
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