Among US retail investors, the bulls are well outnumbered by the bears right now. The latest AAII survey showed 25.4% in the first camp, and 42.1% in the second. This is, of course, helpful to the prospects for an early ending to the current correction on Wall Street. I feel that the sell-off in the US indices could go somewhat further, but is going to present an excellent buying opportunity before too long.
For now, though, I am still looking for a bit more downside, particularly in Europe. The FTSE is especially ugly right now, having closed firmly below its 200-day average last night. The 200-day average is probably the most widely watched indicator of them all. Breaches of this line are significant. I am looking for shorts in Germany and the UK.
Click here for analysis of some leading equity indices.
The US dollar has scope to extend its present rally. It is not yet overbought on its daily chart, while the 38-day cycle is in upwards mode until later May. My only reservation here is the choppiness of the dollar in recent months, during which time it has seldom managed to put together an upswing lasting for all that long. Nevertheless, I am keeping the faith for now, and believe the greenback could head up to its January highs around 82.
Click here for analysis of some leading commmodities.
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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.