It all feels depressingly like last summer, and indeed the summer before that.
The Euro is tanking, and the stock markets are following suit. However, I am still optimistic that a sell-off as dramatic as 2010 or 2011 can be avoided, at least for the US markets. The key difference is that the markets were nothing like as toppy going into the current correction as they were back then.
For now, though, I am not taking any chances. The near-term trend is downwards and I am ready to short the indices, with an emphasis on the DAX and FTSE.
Click here for analysis of some leading equity indices.
We are approaching another potential turning-point in gold, according to the 12-week cycle. I ignored the last turn in this cycle back in March because the yellow metal was merely chopping sideways and wasn’t oversold. I would pay more attention this time round were it to be sporting a daily RSI reading of around 30%, which it is currently not that far from achieving. The next important date in this cycle comes in later June, which is also where seasonal factors turn more positive for gold. So, while I would certainly contemplate buying an oversold daily low in the next few days, I’d be an even more enthusiastic bull were it to bottom out around 22 June. In the meantime, I am looking to do small shorts at the end of failed rallies.
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.