European equities have now been in corrective mode for some seven trading weeks. During this time, the DAX has shed 5.5% from peak to trough, while the FTSE has lost 3.7%. This is hardly a meltdown, and is noticeably milder than the dip in the US Nasdaq 100, for example. However, there is little sign of a meaningful low forming just yet, or more importantly, of a significant move to the upside beginning. Further messy action remains likely for now.
I am still looking for small short positions at the end of intraday rallies in the DAX and FTSE. EURGBP also looks ripe for more downside.
COMMODITIES OUTLOOK
09.45
Despite the Euro’s ongoing decline, gold and silver have held up pretty well. There has been something of a disconnect between precious metals and the single currency of late, with the last rally in the latter also coinciding with weakness in the former. I am willing to bet on this continuing for the moment, along with more downside in the likes of copper and Brent.
for analysis of commodities and EURUSD.WALL STREET OUTLOOK
14.22
Wall Street has continued to weaken in line with my call. And there is no obvious sign of the major low I am looking for yet. We are in the right timeframe for such a bottom to occur, according to the 38- and 87-day cycles. However, my friend and fellow technician Zak Mir – with whom I have just recorded a soon-to-be-aired video – reckons we could be in for 2-3 weeks more of corrective activity. Under the circumstances, I am treating today’s early strength as a shorting opportunity in the making. A retest of last week’s lows is in order.
for analysis of some leading Wall Street indices.
