I don't trust the latest comeback in the indices. Yes, I believe we are still in a bull market. But, no, I do not think the bounce we are currently experiencing is the start of the next leg higher. The short-term downtrend remains broadly intact on most of the indices' charts, despite the up-move yesterday. Also, the gains were not powerful enough in my book to signal that a likely bottom has been formed.
I had a visit yesterday from my friend and charting mentor Zak Mir (www.zaks-ta.com), who was rather excited about the FTSE's recent bounce off its 200-day moving average. He reckons this was technically very significant, confirming the larger uptrend and foretelling a big move higher. In early January, Zak was very bullish on the indices and very correctly so. I'm with him on the bullish outlook today, but I don't think we're quite back at the races yet.
Click here for analysis of some leading equity indices.
Brent's major rally of recent months is not over, merely resting. The high in crude at the start of March does not resemble other significant tops in the past, not least of all because of the lack of extreme overboughtness that accompanied it. The question for now is therefore when the next tradable move higher might begin. The 36-day cycle in crude is hinting at a potential turning-point around now. But there is little evidence of it in the price action. To be on the safe side, I'd like to see Brent back above its 55-day exponential moving average before trying to buy in here again.
Click here for analysis of some leading commodities.
MORE FROM DOMINIC PICARDA...
Dominic Picarda is a Chartered Market Technician and has co-ordinated the IC's trading coverage since 2006. He is a regular speaker at trading and investment events and also holds the Chartered Financial Analyst qualification.